OCC Publishes Guidance as to When Independent Consultants Are Required as Part of an Enforcement Settlement
Commentary by Scott Cammarn
The Office of the Comptroller of the Currency ("OCC") published a bulletin providing guidance and establishing the standards which the OCC uses when requiring national banks, federal savings associations, or federal branches or agencies to employ independent consultants as part of an enforcement action to address significant fraud, violations of law, or harm to consumers.
Highlights of the bulletin include:
- the OCC's assessment of the need to require a bank to hire an independent consultant in an enforcement action;
- the OCC's expectations for a bank's due diligence process when retaining an independent consultant;
- a review of the OCC's qualifications of the proposed consultant and the proposed contractual terms of the engagement; and
- the OCC's oversight of the performance of the consultant.
See: OCC Bulletin.
Commentary
The Guidance arises out of concerns raised earlier this year that bank-hired consultants, often retained by the national bank at the insistence of the OCC in response to supervisory and compliance concerns, may sometimes be insufficiently experienced and may suffer from conflicts of interest. In these instances, the consultant’s effectiveness may be impacted, especially when hired to resolve legal and compliance problems. While the OCC guidance recognizes the important benefits that may result from the bank’s use of consultants and reiterates that the OCC will continue mandating the use of consultants in appropriate circumstances, the guidance is intended to ensure that the consultants employed by the bank are suitably qualified and sufficiently independent with respect to the hiring bank.