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WBK Industry News - Federal Regulatory Developments

The FFIEC Releases its Revised Uniform Interagency Consumer Compliance Rating System

The Federal Financial Institutions Examination Council (“FFIEC”) released its revised Uniform Interagency Consumer Compliance Rating System, more commonly known as the “CC Rating System,” on November 7, 2016. The revisions “reflect the regulatory, examination (supervisory), technological, and market changes” that have happened since the original rating system was implemented in 1980. The FFIEC states that these updates reflect current consumer compliance supervisory approaches and help fully align the CC Rating System with the agencies’ current risk based, tailored examination processes.

The FFIEC is made up of five agencies, the Federal Reserve System, the Consumer Financial Protection Bureau (“CFPB”), Federal Deposit Insurance Corporation (“FDIC”), the National Credit Union Administration (“NCUA”), the Office of the Comptroller of the Currency (“OCC”) and the State Liaison Committee (“SLC”).

The revised CC Rating system is based on a one to five scale, with one representing the highest rating and the lowest level of supervisory concern and five representing the lowest rating and the highest degree of supervisory concern.

The agencies drafted the new rating system with the objective of developing a system appropriate for evaluating institutions of all sizes. The new system is designed to evaluate a compliance management system based on the institution’s size, complexity and risk profile.

Also, the new CC Rating System was designed to establish incentives for institutions that promote consumer protection in a proactive manner.

Finally, the FFIEC wanted to promote coordination, communication and consistency among and between the agencies. Thus, all agencies will assign a rating to supervised institutions, including banks and non-banks.

The CC Rating System is composed of guidance and definitions. The guidance provides examiners with direction on how to use the definitions when allocating the rating. The definitions provide descriptions of each level of risk that can be assigned to an institution.

The assessment factors are broken down into three categories: Board and Management Oversight, Compliance Program, and Violation of Law and Consumer Harm.

The FFIEC stresses that these revisions were not developed to set new or higher supervisory expectations and will represent no additional regulatory burden.

The FFIEC member agencies plan to implement the updated rating system for consumer compliance examinations on or after March 31, 2017.

The complete revised Uniform Interagency Consumer Compliance Rating System can be found here: https://www.ffiec.gov/press/pr110716.htm.