FDIC Highlights 2022 Bank Compliance Examination Results

In a "Consumer Compliance Supervisory Highlights" Report, the FDIC summarized the results of consumer compliance examinations of supervised institutions in 2022 and offered recommendations to strengthen compliance management systems.

The FDIC provided the following recommendations:

  • Real Estate Settlement Procedures Act ("RESPA") Section 8. The FDIC observed violations where banks used third parties in order to "directly steer and affirmatively influence" consumer decision making in the selection of bank settlement service providers. To ensure compliance with RESPA, the FDIC highlighted the following compliance procedures: (i) training staff on RESPA Section 8, (ii) requiring loan officers to annually certify that proper controls are in place and (iii) monitoring lead generation activities.
  • Fair Credit Reporting Act ("FCRA"). The FDIC found instances where financial institutions purchased trigger leads, which involves a lender paying credit reporting agencies to produce a report on certain consumers’ credit activity, but failed to provide consumers with "firm offers of credit." To ensure compliance with FCRA, the FDIC recommended: (i) instituting "comprehensive oversight" of marketing materials, (ii) prescreening credit report information and using appropriate scripts when calling consumers identified in trigger lead processes and (iii) offering letters to consumers meeting prescreening criteria that meet all regulatory requirements.
  • Servicemembers Civil Relief Act ("SCRA"). The FDIC reported violations of SCRA’s anti-acceleration provision by financial institutions after they applied excess interest to servicemembers' principal loan balance without first giving them the option of how to receive their funds. The FDIC mentioned that while reducing the principal does have benefits, the choice of how to receive that benefit must be made by the servicemember.
  • Fair Lending. The FDIC said that fair lending violations have involved discriminatory activity, including redlining, pricing for indirect automobile financing, and in "overt policies" for underwriting and pricing of credit. To avoid discriminatory practices, the FDIC recommended (i) evaluating written credit policies and procedures, (ii) ensuring credit is not being priced in a "discriminatory manner" and (iii) assessing methods by which banks obtain loan applications.

The FDIC stated that in 2022, its enforcement actions resulted in financial institutions paying (i) $1.3 million in civil money penalties and (ii) $13.6 million to 61,000 consumers in voluntary restitution payments.

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