Compliance Best Practices AFSA Annual Meeting

Transcription

1 Compliance Best Practices AFSA Annual Meeting October 7, 2015 George Halloran, Auto Finance Director Telephone Tom McCrea, Senior Consultant Telephone

2 Compliance Management Solutions THE TOP ISSUES Do you have written policies and procedures? Are your policies and procedures up to date? Do staff comply with your policies and procedures? How do you verify staff compliance?

3 Compliance Management Solutions REGULATORS SENIOR LEADERSHIP Enterprise-wide view of the legal, regulatory and internal procedural compliance requirements and workload. Monitor policy and procedure documentation status. Monitor enterprise compliance status related to completed actions, pending actions and exception levels. SALES and MARKETING Fair Lending UDAP Dealer Compliance ENTERPRISE COMPLIANCE MANAGEMENT OPERATIONS Internal Audit and Quality Control Credit Operations Compliance Servicing and Complaint Management Collections Monitoring STRATEGY AND RISK Policy and Procedure Maintenance Compliance Status Exception Monitoring Demonstrate enterprise wide ongoing compliance through documented actions related to policy and procedure maintenance; action item identification, assignment and follow-up; and action archiving. 4

4 Compliance Management Solutions Regulator s Viewpoint

5 Compliance Management Solutions Regulator s Viewpoint Operations & Regulatory Compliance Committee (ORCC) Business Partner Group Conference Call The TCPA - Recent FCC Order (September 21, 2015) The TCPA - Recent FCC Order (September 21, 2015) The Military Lending Act (August 12, 2015) Credit Reporting for Furnishers (July 28, 2015) Social Media Best Practices (June 30, 2015) Fair Lending Study Key Findings (December 10, 2014) Vendor Management (September 24, 2014) Ancillary Products (July 17, 2014) Responding to CFPB CIDs (May 28, 2014) Debt Collections (March 27, 2014) Consumer Complaints (February 27, 2014) The TCPA (January 30, 2014) Fair Lending (December 11, 2013)

6 Compliance Management Solutions Regulator s Viewpoint CFPB s 4 Requirements for a CMS 1. Board Oversight (Management Involvement) 2. Compliance Program: Written Policies & Procedures, Training Monitoring for compliance (Customer Contact Management) 3. Complaint Management Program Monitoring Analysis Process for corrective action 4. Vendor Management Program Due Diligence (especially of their CMS) Monitoring Audit for compliance

7 Compliance Management Solutions Regulator s Viewpoint CFPB s 4 Requirements for a CMS 1. Board Oversight (Management Involvement) 2. Compliance Program: Written Policies & Procedures, Training Monitoring for compliance (Customer Contact Management) 3. Complaint Management Program Monitoring Analysis Process for corrective action 4. Vendor Management Program Due Diligence (especially of their CMS) Monitoring Audit for compliance

8 Example Company Policy Structure Risk Management Policy Business Continuity Plan Credit Risk Modeling Behavioral Scoring Modeling Credit Policy Underwriting Fair Lending Funding UDAP Credit Reporting Operating Policy Approval Authorities Internal Audit Servicing and Collections Complaint Mgt Service Provider

9 Example Company Policy Structure Risk Management Policy Business Continuity Plan Credit Risk Modeling Behavioral Scoring Modeling Credit Policy Underwriting Fair Lending Funding UDAP Credit Reporting Operating Policy Approval Authorities Internal Audit Servicing and Collections Complaint Mgt Service Provider

10 Example Compliance Action Framework Disparate Impact Checklist Fair Lending Credit Collections Credit Application Checklist Contract Checklist Etc. Document Files Source Policies Source Checklists Checklist Data Other

11 Example Compliance Action Framework

12 Example Compliance Action Framework Action Description On a monthly basis the VP of Credit is to ensure the completion by the Funding Manager of the Funder Weekly Review of 10 Customer Contracts per funding staff member and complete a random review of 25 contract review checklists. PARAMETERS Action Name Funding Manger Contract Review Action Cycle Monthly Action Start Date 01/01/2014 Action Party (User ) Alert Party (User ) Reviewer (User ) Review Alert Party (User ) Reminder Cycle Daily Alert Cycle Weekly Checklist VP Contract QA Checklist

13 Example Company Policy Structure Risk Management Policy Business Continuity Plan Credit Risk Modeling Behavioral Scoring Modeling Credit Policy Underwriting Fair Lending Funding UDAP Credit Reporting Operating Policy Approval Authorities Internal Control Procedure Servicing and Collections Service Provider

14 Example Company Policy Structure Deale Sales Checklist Credit Credit Application Checklist Internal Control Procedure Funding Collections Contract Checklist Others Audit Program Checklists Checklist Archives Other Areas

15 Example Company Policy Structure CHECKLIST OPTIONS Internal Control Procedure Word UI with Credit Smart PDF Excel Funding Collections ARCHIVE OPTIONS Completed Other Document Areas Image Deale Sales Checklist Credit Application Checklist Contract Checklist Others Audit Program Checklists Checklist Archives

16 Example Company Policy Structure Checklist Library Credit Applications Audit Credit Exceptions Audit Funded Contracts Audit Call Monitoring Vendor Audit

17 Example Company Policy Structure

18 Example Company Policy Structure JIT Checklist Library

19 Example Company Policy Structure Call Monitoring Checklist JIT Checklist Example NO EXCEPTIONS Ad-Hoc Action Item Neded for Follow-up 1. Properly Identified self and Company 2. Customer ID d and Security script used 3. Uncovered reason for delinquency 4. Identified solution to cure delinquency and 5. Make future arrangements. 6. Documented Account Correctly 7. Updated customer information 8. Confirmation of Arrangements 9. Close conversation

20 Example Company Policy Structure JIT Checklist Example Contract Fair Lending Checklist NO EXCEPTIONS Ad-Hoc Action Item Neded for Follow-up Decision Approval Summary Protected Class Violation Non-Standard Rate (proper approval) Non-Standard Dealer Comp (proper approval) Contract Loan contract is original Only 1 copy of loan contract Name spelled correctly and matches all documents Complete address Dealer same on contract and in approval First Payment due date correct Signature (spouse signature, if applicable) on all applicable lines Interest rate correct Dealer compensation correct

21 Hudson Cook Templates Hudson Cook has developed a suite of templates for an auto finance company to use to implement a Compliance Management System, (the CMS Templates ). The CMS Templates are copyrighted.

22 Hudson Cook Templates Board and Senior Management Regulatory Compliance Compliance Program Fair Lending Program Credit Funding Servicing and Collection Credit Reporting Anti-UDAAP Program Marketing Telephone Contact Privacy Service Provider Training Monitoring Complaint Management Program Audit Program

23 Hudson Cook Templates Action Item Parameters can be imbedded as comments

24 Policy Compliance Workflow TRIGGERS ALERTS All Policy and Procedure Document Update Actions All Scheduled Policy Actions Required Follow-up Actions for Actions & Complaints Delinquent Actions to manager(s) All Complaints Selected reviews

25 Compliance Activity Reporting Policy Documents 32 Up to Date 23 Updating 9 Pending Actions Pending Status 4 1 Rev Pending Status Rev Pending Completed Actions Completed Status Reviews

26 Compliance Activity Reporting Complaints Pending Status Rev Pending Completed Actions Completed Status Reviews

27 Compliance Activity Reporting COMPLAINT ANALYSIS Category Resolution Geography Organization Dealer User ABSOLUTE TREND ROOT CAUSE

28 Compliance Activity Reporting COMPLAINT ANALYSIS Category Standards Resolution Standards Geography Organization Dealer Employee CFPB - 1 Closed with monetary relief CFPB - 2 Closed with non-monetary relief CFPB - 3 Closed with explanation CFPB - 4 Closed CFPB - 5 Duplicate CFPB case reported CFPB - 6 Redirected to related company CFPB - 7 Alerted CFPB CFPB - 8 Incorrect company CFPB - 9 Sent to regulator eoscar -1 Account information accurate eoscar -2 Modified account information eoscar -3 Delete account eoscar -4 Misrouted ACDV eoscar -7 Delete due to fraud

29 Compliance Activity Reporting Policy Documents 32 Complaints Status Up to Date 23 Pending Updating Rev Pending Rev Pending 1 1 Pending Actions Status 0 Pending Rev Pending Completed Actions Status Completed Reviews Status Completed Actions Status Completed Reviews Corrective Actions Status Pending Rev Pending Completed Actions Status Completed Reviews

30 Compliance Management Solutions Road Forward 1 st STEP. Written set of Policies & Procedures THEN Process to assure review and updating Process to assure compliance Complaint Management Program

31 Compliance Management Solutions TOP TEN CMS IMPERATIVES Executive Level Enterprise-wide Involvement Full Spectrum of Documented Policies and Procedures Procedure-driven Compliance Action Catalog Comprehensive Compliance Archive Exception-based Management Support Compliance Status and Workload Reporting Due-Diligence and Regulator Audit Trail Easy to Implement Easy to Operate Cost effective

32 Compliance Management Solutions Auto Finance Summit Real Time Survey On which of the following are you most relying to aid in your Regulatory / Compliance Performance? Third Party Vendor 19% Expanded in-house compliance team 37% Technology 16% All The Above None of the above 26% 2% 63% BenchMark, FICO, Hudson Cook, Jericho Information Technology and other AFSA Business Partners can help you with this.

33 More Questions?