The Federal Reserve Bank of Philadelphia hosted a consumer compliance seminar focused on unfair and deceptive acts or practices. In addition to providing a summary of the UDAP legal authority and examination framework, the seminar included a discussion of case studies and the risks faced by bank holding companies. For example, the seminar focused on the practice of bank underwriter’s misrepresenting consumers’ income, assets and debts to meet purchaser guidelines and practices related to automated overdraft programs. Areas of emerging UDAP risks were also identified to include, among other things, time-barred debt collection, servicing practices and third party vendor management. The seminar provided recommendations for the implementation of an effective UDAP program. For example, internal reviews incorporating UDAP reviews into the life cycle of a product or service and reviews of loan officer compensation practices were recommended.
Alert March 19, 2013