FFIEC offers updated Consumer Compliance Rating System

April 29, 2016

Federal Financial Institutions Examination Council (FFIEC) agencies, including the NCUA, issued a joint proposed rule Friday updating the Uniform Consumer Compliance Rating System that has been in place since 1980. CUNA will analyze the rule to determine its effect on credit unions, and will participate in the rulemaking process to ensure a minimal impact.

The Consumer Compliance Rating System is a supervisory policy for evaluating financial institutions’ adherence to consumer compliance requirements.

According to the agencies, they recognize that the compliance world has changed since the system was put in place in 1980, and this change is to reflect consumer compliance supervisory approaches already being used.

The revised system will have three categories:

  • Board and management oversight;
  • Compliance programs; and
  • Violation of laws and consumer harm.

The revisions are designed to more fully align the rating system with the FFIEC agencies’ current risk-based, tailored examination approaches. The proposed revisions were not developed with the intention of setting new or higher supervisory expectations for financial institutions; their adoption will represent no additional regulatory burden.

The NCUA will consider ratings within the context of the existing CAMEL rating structure and will not have a separate compliance rating. According to the NCUA, there will be no new supervisory expectations with these changes.

The Consumer Financial Protection Bureau will assign individual ratings for institutions subject to their jurisdiction. The other FFIEC agencies will have a rating of one to five for the various categories.

Comments on the proposal will be due 60 days after it is published in the Federal Register, which is expected in the coming days.