I. INTRODUCTION
The FDIC issued a Financial Institution Letter (FIL-87-97) on September 2, 1997, to reiterate the need of establishing an effective compliance program by each bank in order to avoid, correct or minimize violations of consumer and fair lending laws and regulations. A bank’s board of directors is responsible for establishing an effective compliance program. This article lists both the elements and implementation of a compliance program as noted briefly in FIL-87-97.
II. ELEMENTS OF AN EFFECTIVE COMPLIANCE PROGRAM
In establishing an effective compliance program, the board of directors should include the following listed elements:
-written policies and procedures;
-monitoring procedures for periodic “pro-active” review, including the bank’s lending policies;
-education and training of appropriate bank personnel;
-nondiscriminatory lending criteria;
-loan application procedures;
-period review of standard forms utilized by the bank;
-establishing and implementing a compliance audit program; and
-procedures to handle consumer complaints.
III. IMPLEMENTING AN EFFECTIVE COMPLIANCE PROGRAM
In order to implement an effective compliance program, the bank’s board of directors should appoint a compliance officer with the responsibility for:
-reviewing policies and procedures for compliance;
-training all employees in consumer laws and regulations;
-coordinating consumer complaints; and
-providing periodic reports to the board of directors regarding the effectiveness of the program and recommendations for any improvements.
IV. CONCLUSION
Among the many resources a bank may use in establishing an effective compliance program include the FDIC’s Compliance Examination Handbook, which may be obtained by writing to FDIC Legal Division Legal Information Technology Unit, 3501 North Fairfax Drive, Room VS-E-6125d, Arlington, VA 22226; by internet access by going to the FDIC website (www.fdic.gov), Resources tab, Supervision and Examinations tab, Consumer Compliance Examination Manual; or email at regs@fdic.gov.