The CFPB recently released a compliance bulletin designed to protect consumers from potentially harmful production incentives. In a recent CompBlog entry, CUNA compliance staff examined the bulletin and addressed why it is important for credit unions to have a robust compliance management system.
The bulletin provides a non-exhaustive list of specific examples of problems related to production incentives.
This includes the following:
Credit unions should ensure that they are not setting benchmarks or tying compensation to sales goals or quotas that could incentivize their employees to engage in Unfair and Deceptive Acts and Practices or violate other consumer financial laws.
Whenever there are employee incentives, the CFPB expects supervised entities to have proper controls in place and monitoring of the program to ensure that the type of deceptive activities described above are not occurring.
The bulletin lays out what CFPB considers to be the elements of an effective CMS, which often includes:
For more information, see the CompBlog post.