Monetary establishments which might be regulated and supervised by the Workplace of the Comptroller of the Foreign money (OCC) ought to know that the OCC has lately up to date its booklet on Unfair or Misleading Acts or Practices (UDAP) and Unfair, Misleading, or Abusive Acts or Practices (UDAAP). The booklet — which is designed to tell examiners concerning the dangers of banks and their third events participating in lending, advertising and marketing, overdraft packages, or different practices which will represent UDA(A)P — was final up to date in June 2020.
Federal legislation has lengthy prohibited UDAP (beneath part 5 of the Federal Commerce Fee Act, as enforced by the Federal Commerce Fee) and UDAAP (beneath the Shopper Monetary Safety Act of 2010, as enforced by the Shopper Monetary Safety Bureau), however the OCC’s replace units forth expanded procedures for examiners to judge dangers beneath these legal guidelines and serves as a reminder that the OCC will proceed to emphasise them in its supervisory and enforcement issues.
In its up to date booklet, the OCC:
- Affords readability on sound threat administration practices for third-party relationships, emphasizing that threat can enhance when a financial institution provides services or products by means of third events or outsources origination, servicing, or operational processes to such events;
- Guides examiners on overdraft companies and overdraft safety program threat administration;
- Incorporates Shopper Monetary Safety Bureau updates on knowledge safety and knowledge safety insurance policies and procedures;
- Affords element about mortgage and deposit account administration, figuring out actions that heighten regulatory threat;
- Updates the “Appendix B: UDAP and UDAAP Threat Indicators;” and
- Incorporates OCC and interagency issuances which have been printed or rescinded since June 2020;
OCC-regulated entities can use the booklet as a useful resource as they handle the regulatory compliance panorama. The appendices on the booklet’s conclusion are significantly helpful, as they define a structured strategy to evaluate threat and supply a framework for evaluating the effectiveness of an establishment’s compliance administration programs. That stated, given the expansive nature of the UDA(A)P prohibitions, there isn’t any one-size-fits all strategy. Successfully managing UDAAP threat requires an in depth, institution-specific evaluation that takes under consideration the distinctive traits of the underlying services and products and the way they’re marketed and delivered to shoppers.
Foley’s shopper finance observe is well-versed in serving to monetary establishments, fintech purchasers, and different regulated entities to evaluate and mitigate threat and compliance administration, together with in areas equivalent to:
- Managing third get together relationships (e.g., with advertising and marketing firms, mortgage brokers, mortgage mortgage originators, monetary know-how companions, or assortment firms);
- Creating and/or assessing the sufficiency of shopper disclosures, together with as they relate to new merchandise or packages;
- Troubleshooting data know-how (IT) programs and functions, together with knowledge safety for shopper data and the way it might have an effect on UDA(A)P threat;
- Reviewing advertising and marketing supplies and contract phrases to make sure they continue to be correct and don’t probably mislead shoppers a few services or products; and
- Evaluating any charges related to a services or products {that a} regulator might deem to be a “junk charge.”
The publish Workplace of the Comptroller of the Foreign money Updates “Unfair or Misleading Acts or Practices and Unfair, Misleading, or Abusive Acts or Practices” Booklet appeared first on Foley & Lardner LLP.
