Bank Regulator Puts Sales Practice Governance on Risk Radar

Governance over sales practices is now considered a key risk at large and mid-sized banks, the Office of the Comptroller of the Currency said in a semi-annual report published Thursday.

The report, which focuses on strategic, credit, operational and compliance risks, reflects tighter scrutiny from regulators following September’s enforcement actions against Wells Fargo & Co. after the bank’s aggressive sales tactics resulted in a consumer fraud scandal. The OCC, one of the regulators involved in the enforcement actions, doubled down on control over Wells Fargo in November and is now probing sales practices at other large and mid-sized banks.

Regarding other risks, little has changed since the publication of the previous semi-annual report in July, according to Comptroller Thomas Curry.

“Key risks include strategic, credit, operational, and compliance risks,” Curry said in a conference call with reporters on Thursday. “While these concerns are broadly the same as in our prior report, we’ve added governance over sales practices to that list.”

Wells Fargo, he said, failed in that area.

“After the OCC’s actions against Wells Fargo for failures in governance of its sales practices, the OCC initiated a broader review to assess whether similar practices and weaknesses are occurring in other large and mid-size banks,” Curry said. “Work on the review continues.”

Other than aggressive sales practices, specific risks include cybersecurity, regulatory compliance, easing of underwriting standards and risk management in commercial real estate lending, the report said.

Banks also face risks as they evolve to compete with financial technology firms and adopt fintech products, according to the report. Fintech firms will soon be eligible for special purpose OCC charters.

“Strategic planning remains important as banks adopt innovative products, services, and processes in response to the evolving demands for financial services and the entrance of new competitors,” the report said.


Finance Brief: Pence’s Tax Lobbying on Hill Rankles Republican Study Committee Members

Vice President Mike Pence urged House Republican Study Committee Chairman Mark Walker (N.C.) to poll the group’s members on whether they’d support the White House tax outline over the House GOP blueprint, a move that spurred criticism from members. Some RSC members oppose the idea of breaking from the House leadership’s tax plan, which differs in key ways from President Donald Trump’s proposal.

Finance Brief: Intra-Party Debate Over Swipe Fees Intensifies

An intra-party dispute over a proposed repeal of debit card swipe-fee limits may delay a House vote on the the Dodd-Frank replacement bill sponsored by Financial Services Committee Chairman Jeb Hensarling (R-Texas), who urged colleagues to support the measure during a conference meeting Tuesday. GOP Reps. David Young (Iowa) and Dennis Ross (Fla.) want the repeal language removed from the bill.

Finance Brief: Week in Review & What’s Ahead

Treasury Secretary Steven Mnuchin told lawmakers that the Trump administration does not support reinstating the firewall between investment and commercial banking required under the Depression-era Glass-Steagall Act, clarifying previous remarks from White House officials that indicated a preference for reinstating the law that was repealed in 1999.

Load More