SDBA eNews: August 4, 2016

In This Issue

SBS Institute Provides Whitepaper on Updated FFIEC  Retail Payments


SBS Institute recently published a whitepaper on the updated FFIEC Retail Payment Systems Handbook regarding mobile financial services.

The whitepaper is designed to interpret the full 18-page FFIEC Retail Payment Systems Appendix E: Mobile Financial Services (MFS) guidance into a shorter, more usable format. The whitepaper lists out specific types of MFS, specific threats to MFS and specific controls to implement on MFS.

The goal is for bankers to use the paper to update their risk assessments around the different types of MFS that institutions provide to customers. View the whitepaper.


OCC Updates Comptroller's Handbook


The OCC last week issued revisions to the “Corporate and Risk Governance” booklet of the Comptroller’s Handbook. The updated booklet discusses expectations and responsibilities for bank management and board with respect to enterprise risk management and governance.

Among other things, it expands the discussion on risk management to include the three lines of defense; provides guidance on strategic, capital and operational planning; and describes risk culture and appetite in the context of a risk governance framework.

With these revisions, the OCC rescinds several of its previously issued booklets. View the booklet.


Question of the Week

Are overdraft services excluded from the new Proposed Rule on Payday, Vehicle Title, and Certain High-Cost Installment Loans? What other types of credit are excluded?

Answer: 

Overdraft services, including overdraft lines of credit, are explicitly excluded from the new Proposed Rule on Payday, Vehicle Title, and Certain High-Cost Installment Loans. Other types of credit that are also explicitly excluded are:

  • Purchase money security interest loans;
  • Real estate secured credit that is perfected;
  • Credit cards;
  • Student loans; and
  • Non-recourse pawn loans.

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Cybersecurity Training for Banks To Be Held Aug. 16


The South Dakota Division of Banking will hold a cybersecurity training at Dakota State University (DSU) in Madison on Tuesday, Aug. 16. The training is co-hosted by the South Dakota Bankers Association, Independent Community Bankers of South Dakota, Conference of State Bank Supervisors and DSU.

Speakers will include law enforcement officials, state and federal regulators and DSU educators. Agenda topics include the threat of cybercrime, risk assessments and best practices, along with roundtable discussion and a hacking simulation table top exercise.

“Financial institutions are constantly combatting online threats which could compromise the safety and soundness of their operations,” said South Dakota Banking Director Bret Afdahl. “This training will better equip bank leaders with the questions to ask and the steps to take to better prepare their institution to survive and thrive in today’s challenging environment.”

Executive Leadership of Cybersecurity will be held from 9 a.m. to 4 p.m. on Aug. 16. Interested parties can register online for $150.


Under Criticism, FDIC Amends Exam Appeals Process


The FDIC board last Friday voted to propose amendments to its supervisory guidelines that would expand banks’ rights to appeal exam decisions and improve consistency with other agencies’ appeals processes. The action follows a blistering February report from the agency’s independent watchdog on the FDIC’s handling of banks making tax refund anticipation loans and also responds to comments raised by ABA and others in the recently concluded Economic Growth and Regulatory Paperwork Reduction Act process.

In particular, the proposal would allow banks to appeal a determination of compliance with an existing formal enforcement action and a determination to initiate an informal enforcement action. It would also modify when formal enforcement actions become unappealable and provide additional Supervision Appeals Review Committee appeal rights. Comments on the proposed changes will be due 60 days after publication in the Federal Register.

The agency reissued its 2011 financial institution letter reiterating the importance of open communication on exam findings and encouraging bankers to raise concerns with and provide feedback to examiners. It also issued a policy statement on supervisory recommendations that emphasized that informal supervisory conversations are not formal recommendations. “Accordingly, informal communications should not be used to convey expectations of action by bank management and will not be tracked as part of the FDIC’s examination follow-up supervisory activities or at subsequent examinations,” the agency said.

ABA supports bipartisan exam fairness legislation in both houses of Congress that would provide an independent appeals option to financial institutions along with safeguards to protect against retaliation. The House bill, which passed the House Financial Services Committee last summer, currently has 73 co-sponsors, while the Senate version has 23.


FDIC Issues Draft Guidance on Third-Party Lending

 
The FDIC board also voted to issue examination guidance for third-party lending. The term encompasses any involvement of a third party in any part of the lending process, including marketing, underwriting, pricing, servicing, disclosures, compliance, collection and other areas--whether the FDIC-insured institution originates a loan on behalf of a third party, uses a third party’s platform or originates a loan through or jointly with a third party.

The exam guidance supplements the FDIC’s existing guidance on third-party risk management and covers strategic, operational, credit and compliance risks associated with third-party lending. It also covers the basic elements of an effective third-party lending risk management program, including risk assessment, due diligence, contract structuring and oversight.

The draft guidance also covers supervisory considerations for third-party lending arrangements and outlines exam procedures. Comments on the draft guidance are due Sept. 12 and should be sent to [email protected]. Read the draft guidance. For more information, contact ABA's Cecelia Calaby or Barry Mills.


CFPB Proposes Amendments to TRID Rule


The Consumer Financial Protection Bureau last Friday proposed certain changes to the TILA-RESPA integrated disclosures, including some advocated by ABA to improve the ability of lenders to comply with TRID and avoid unnecessary constrictions of mortgage credit.

Among the items included in the 293-page proposal are tolerance provisions for the disclosed total of payments, making the treatment consistent with pre-TRID practices and paralleling the TRID tolerances for disclosures of finance charges. The bureau would also add commentary facilitating the customary sharing of disclosures with third parties, such as sellers and real estate brokers. The proposal would also partially exempt certain housing assistance loans from TRID requirements and extend the rule’s coverage to all cooperative units.

“These proposed changes begin the process of making needed adjustments and clarifications inherent in any large and complex rulemaking,” said ABA President and CEO Rob Nichols. “While we don’t anticipate that this proposal will address all of our concerns--and are certain others will arise--we do appreciate the good faith effort made by the CFPB to begin a process for ensuring an improved rule that will benefit all participants in the loan process. We will continue to work with our members and the bureau on further necessary clarifications, adjustments and guidance that will allow us to better serve our customers.”

ABA will review the proposal in full and provide comments, which are due Oct. 18. Read the proposed rule. For more information, contact ABA's Rod Alba.


CFPB Proposes Feedback Mechanism for Complaint Handling

 
The Consumer Financial Protection Bureau last Friday announced plans to change the “dispute” function in its consumer complaint database to allow complainants to take a short survey on the company’s response to their complaints. The survey information--a one-to-five rating of the company’s response and an optional narrative--would be shared with the company that is the subject of the complaint and, with the complainant’s permission, be posted in the complaint database.

This process contrasts with the present dispute process, which does not allow for positive feedback and provides less information about the company’s response. The bureau said it expects companies to benefit when positive complaint handling stories are shared and that it anticipates implementing this revised feedback process in early 2017.

The bureau is treating this change as an “information collection” subject to the Paperwork Reduction Act, not as a legislative rule subject to the rulemaking procedures of the Administrative Procedure Act. ABA has expressed concern over the CFPB’s increasingly common practice of using information collections as a substitute for notice-and-comment rulemaking. Comments are due by Sept. 30. Read the proposal. For more information, contact ABA's Jonathan Thessin.


CFPB Issues Proposals for Regulating Debt Collection

 
The Consumer Financial Protection Bureau last week issued an outline of proposals under consideration for updating the Fair Debt Collection Practices Act. While the proposals only apply to debt collected by third parties, the bureau has indicated its intention to address first-party debt collection “on a separate track.”

Among other things, the proposals call for caps on debt collection attempts and require collectors have sufficient information before attempting to collect a debt. Debt collection companies would also be required to clearly disclose debt details to the consumer and provide an easier dispute process. The proposals will be reviewed by a Small Business Review Panel, which will gather feedback from small industry players.

Along with the proposal last week, the bureau released a study of third-party debt collection operations. ABA is currently drafting a staff analysis of the proposals and will continue to engage with the CFPB as the rulemaking moves forward. Read the proposals. Read the CFPB study. Bankers wishing to provide input on the proposals are invited to join ABA’s debt collection working group by contacting Anjali Philips.


SDBA Bank Technology Conference "Room Block" Ending Soon


IMPORTANT TO DO NOW – Mark Your Calendars to attend the SDBA’S BANK TECHNOLOGY CONFERENCE on September 20 and 21 and then MAKE YOUR HOTEL ROOM RESERVATIONS BY August 20th!

To make your room reservations, contact the Hilton Garden Inn Sioux Falls Downtown in Sioux Falls, SD and request a room by August 20, 2016 out of the “South Dakota Bankers Association” block in order to qualify for the special conference rate of $139 per night.  

Hilton Garden Sioux Falls Downtown
201 E. 8th Street
Sioux Falls, South Dakota  57104

Phone:  605-444-4700
Website:   http://siouxfallsdowntown.hgi.com/

A marketing brochure with program descriptions and speaker backgrounds, plus a registration form will be on our website and sent by mid August.  Registration fee is $479/person.  Highlights and speakers for the September Conference are as follows:

Tuesday, September 20, 2016:
Afternoon session beginning at 1:00 p.m.

  • “Cybersecurity Bootcamp – A Year of the CAT – How Risk Assessment is Changing (For the Better)” with Jon Waldman, Secure Banking Solutions, Madison, SD

Evening reception and dinner

  • “Who’s on First, What’s on Second?  Changes in Banking and the Millennials Driving Them” - David Peterson, Principal , i7Strategies, Hahira, Georgia 

Wednesday, September 21, 2016:
Morning Sessions

  • Enterprise-wide Innovation: Is it Impossible, Improbable or Inevitable?” -  David Peterson, i7Strategies, Hahira, Georgia

  • “Cyber Security Breach Playbook - What Every IT Administrator Needs to Know” - Andy Deinert, Engineering Team Leader, Vantage Point Solutions, Mitchell

  • “Teaching Business Customers about CyberSecurity” - Jack VonderHeide, Technology Briefing Centers, Chicago, Illinois   

  • “Secure Identity:  StealthType ™ Anti-Keylogging Tool” - Secure Identity Systems, Brentwood, Tn  

Afternoon Sessions

  • “Balancing Hi-Tech and Hi-Touch: Innovative Ways to Provide Superior Service to All Generations” - Jack VonderHeide, Technology Briefing Centers, Chicago, Illinois

  • “Planning to Fail Well – Today’s Incident Response Expectations” - Jon Waldman, Secure Banking Systems, Madison, SD