CFPB “Expects” Independent Compliance Audits

The CFPB recently published their Summer 2013 Supervisory Highlights.  The purpose of this publication is to periodically review the development of the Bureau’s supervision program and share certain key findings from their supervisory activities in order to help the industry limit risks to consumers and comply with Federal consumer financial laws.

This edition states:

The most common weakness identified during CFPB CMS (compliance management system) reviews in banks is a deficient system of periodic monitoring and independent compliance audits…

Although the CFPB does not require any specific CMS structure, supervisory experience has found that an effective CMS commonly has four interdependent control components:

1. Board of directors and management oversight;

2. A compliance program;

3. A consumer complaint management program; and 

4. An independent compliance audit. 

Although not required by regulation, it’s clear that the CFPB has an “expectation” of an independent compliance audit.

Jerod Moyer

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