Admittedly, it’s been quite a few years since I’ve worked as a compliance officer in a bank.
So, it’s been a while since I’ve had the firsthand experience of managing a bank compliance examination with real, live bank examiners from the OCC, FDIC, or FRB, and I was consulting before CFPB arrived.
Recently I had an opportunity to work with a bank during a compliance examination while the examiners were on-site.
Examinations are always a stressful and challenging time for an institution. Much preparation is involved and there is a great deal of anxiety over what they might find or criticize or uncover.
That part certainly hasn’t changed. I daresay it’s definitely grown worse.
And this time there was a new twist, quite literally.
Pace just keeps stretching
Compliance examinations seem to stretch on much longer than they use to (from what I remember). Requests for information start much earlier and keep on coming regularly for months before the examination’s start date. And requests for information continue after you think the examination is over.
Once the examiners are on-site you spend considerable time explaining and justifying your program. And doing the same with documentation that seems to you to be clear as a bell.
After a week of regular interaction with the examiners and discussions about their observations and concerns, I thought I had a good understanding of what their examination results would be.
Of course, examination results are never completely final at that stage. Multiple layers of review and approval have to take place and no findings are final until the ink is dry on the final report.
However, when an exit meeting occurs at the conclusion of an examination, bank management expects to get a good idea of what the examiners have found and concluded about the bank.
Wait … what?!?
Instead, the exit meeting proved to be a total flip flop of what we were expecting based on the week-long visitation.
What the examiners didn’t like throughout the week, they praised during the exit meeting.
What they had previously said was acceptable (high praise from an examiner!) was now unacceptable at the exit meeting.
I’m not sure if this is a tactic to eliminate any opportunity for counter arguments from the institution, since it is the last day of the examination and the examiners are half-way out the door.
But, I’m sure if I did this type of thing as a compliance consultant during an external compliance audit, I wouldn’t be invited back again.
Give me your feedback
What’s going on out there?
Is this a unique experience?
Is it similar to an experience you have had?
Share your compliance examination experiences with me in the comment section below.
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