Compliance Questions & Answers

The Federal Reserve and the CFPB have implemented amendments to Regulation CC to adjust the dollar amounts for inflation. The newest adjustments are effective July 1, 2020. The next round of adjustments will be July 2025, and on every July 1, of every fifth year after 2025, according to the Consumer Price Index for Urban Wage Earners and Clerical Workers. A new section was added to Regulation CC which addresses the indexing of the dollar amount adjustments, the procedures used, and the adjustment amounts.

Regulation CC: 12 CFR 229.11; See also: 12 CFR 229.10(c)(1)(vii), 229.12(d), 229.13(a), (b), (d); and 229.21(a)

Following regulatory compliance regulations including Regulation Z which requires focus on the ability to repay, sets standards for all calculations and disclosure of costs in a uniform manner.

• RESPA which prohibits borrowers from paying fees that aren’t reasonable.
• Regulation B which prohibits discrimination on a prohibited basis.
• Section 5 of FTC Act on UDAAP and safety and soundness policies.

All of these help a lender assess whether the bank’s lending practices are fair, clear, conspicuous, and protect the consumer from unreasonable risk.

Lastly, training of personnel must be ongoing focusing on the requirements with emphasis on fair lending.

Reference: Fair Lending: Regulation B 12 CFR 1002, FHA; Regulation Z 12 CFR 1026; RESPA (Regulation X) 12 CFR 1024; Section 5 of FTC UDAAP.

An effective Compliance Management System has four parts:

1. Board of Directors and management oversight;
2. Compliance program;
3. Consumer Complaint Management Program, and
4. Compliance audit.

Title III addresses the requirements for businesses and nonprofits including banks. In general, the ADA states that financial institutions must remove barriers physical and those preventing effective communication. For example, removing physical barriers may include providing ramps, repositioning tables, repositioning telephones, widening doorways, etc.

Effective communication may include: qualified sign language assistance, TTY, computer assisted real time transcription, braille at ATM, etc.

Reference: 42 U.S. Code Chapter 126 -[42 U.S.C. 12101] Equal Opportunities for Individuals with Disabilities; Pub. L. 110–325 See also: https://www.ada.gov/regs2010/titleIII_2010/titleIII_2010_regulations.htm#subpartc

After filing, a confirmation receipt will be received.

The Bureau’s HMDA Platform will not allow a bank to submit its loan/application register without addressing all edits and having an authorized representative of the institution with knowledge of the submitted data certify to the accuracy and completeness of the data.

Reference: HMDA Filing FAQs - https://www.consumerfinance.gov/data-research/hmda/faq.

See also: https://ffiec.cfpb.gov/

Federal Banking Law that prohibit banks from engaging in a lottery, was revised via the American Savings Promotion Act of 2014 to include that the term lottery does not include “savings promotional raffle”, as codified under law (see applicable law for your banking agency).

The term "savings promotion raffle" means a contest in which the sole consideration required for a chance of winning designated prizes is obtained by the deposit of a specified amount of money in a savings account or other savings program, where each ticket or entry has an equal chance of being drawn, such contest being subject to regulations that may from time to time be promulgated by the appropriate prudential regulator (as defined in section 1002 of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5481).

Consideration: Some interpretations state because the customer is paying “a thing of value” for consideration of a prize it is a lottery.

If the bank allows noncustomers to enter also, and no “purchase is necessary” it may no longer be considered a lottery. Consult your bank’s attorney and consider State law (state law must also allow for this type of activity).

Also be sure that the bank fully discloses any rules for the contest. Additional considerations include federal compliance regulations e.g., Regulation DD which addresses disclosing any minimum deposit amount.

Note: States and local municipalities may have their own rules regarding lotteries, contests and sweepstakes. Contact your appropriate authority for additional guidance.

Reference: OCC 12 USC 25a; FED Section 9a of Federal Reserve Act; FDIC section 20 of Federal Deposit Insurance Act. See also: Consumer Financial Protection Act of 2010 Section 1002 “definitions” for prudential regulator; The American Savings Promotion Act of 2014 (PUBLIC LAW 113–251); and Regulation DD