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UDAAP controls for managing risk
Journal of Financial Compliance,
2
(3),
271-283
(2019)
Abstract
Compliance with unfair, deceptive or abusive acts or practices (UDAAP) principles is a complicated matter for most financial institutions (FIs), large or small. In the USA, UDAAP regulations are broadly defined and fairly subjective in interpretation, especially when applied by regulators with the benefit of hindsight. An allegation of ‘unfair’, ‘deceptive’ or ‘abusive’ can arise in any aspect of the FI’s retail footprint, from the initial development and marketing of products and services, through to management of complaints and servicing. The increased complexity of financial products and services, along with a myriad of communication and delivery methods, has made the compliance task more daunting in terms of preventing UDAAPs from occurring. This paper is intended to help identify potential UDAAP risks and provide practical guidance for mitigating those risks with strong controls as part of a comprehensive compliance management system (CMS).
Keywords: UDAP; UDAAP; unfair; abusive; deceptive (practices); compliance management system (CMS); risk assessment
The full article is available to subscribers to the journal.
Author's Biography
Barbara Boccia is a senior director at Wolters Kluwer and leads the US Advisory Services consulting team. She assists financial institutions of all sizes, including fintech companies, to manage effectively compliance and risk in a complex and evolving regulatory environment. Boccia brings more than 30 years of professional experience to the Advisory Services team. She has a broad range of expertise leading strategic and technical regulatory compliance engagements relating to the broad array of consumer protection regulations within the financial services sector, including fair lending, Community Reinvestment Act (CRA), Home Mortgage Disclosure Act (HMDA) and unfair, deceptive or abusive acts or practices (UDAAP). Additional expertise delivered to clients includes assistance with the development and assessment of compliance management systems (CMS), compliance risk assessments (including fair lending, UDAAP), CRA programmes, compliance monitoring and testing, control processes, complaint management programmes, and third-party vendor management programmes. Projects also include a broad range of regulatory compliance issues for regulations relating to lending (including mortgage, auto and credit cards), deposits, marketing, underwriting, servicing, collections, fintech and Bank Secrecy Act/Anti-Money Laundering/Office of Foreign Assets Control (BSA/AML/OFAC). Her focus includes regulatory change management, whether change is occurring due to organic growth, mergers and acquisitions, or as a proactive response to new regulations or marketplace opportunities. Boccia also assists clients in areas of convergence across regulations, such as CRA, fair lending and HMDA, including redlining and REMA (reasonably expected market area) analysis. Work includes preparing clients for regulatory exams before the Consumer Financial Protection Bureau (CFPB), Board of Governors of the Federal Reserve System (FRB), Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC) and National Credit Union Association (NCUA); resolving regulatory enforcement actions, and assisting with remediation efforts. A regular speaker, she has most recently presented at the American Bankers Association’s Regulatory Compliance Conference, Suncoast Bankers Association, the CRA & Fair Lending Colloquium, Utah Bankers Association and California Bankers Association. Her commentaries most recently have appeared in Bank News, Independent Banker and ABA Bank Compliance magazines.
