Fed Announces Consumer Compliance Program
The Federal Reserve Board recently announced plans to immediately begin examining nonbank subsidiaries of bank holding companies and foreign banking organizations (FBOs) for compliance with consumer protection rules. The policy allows the Fed to investigate consumer complaints against the nonbank operations.
"This policy is designed to enhance our understanding of the consumer compliance risk profile of nonbank subsidiaries and to guide our supervisory activities for these entities," Sandra Braunstein, director of the Division of Consumer and Community Affairs at the Federal Reserve Board, wrote in a Consumer Affairs letter to the 12 regional Reserve Banks. "It leverages existing consumer compliance supervision policies and procedures as well as the existing prudential supervision processes for Large Complex Banking Organizations (LCBOs), FBOs, Regional Banking Organizations (RBOs), and Community Banking Organizations (CBOs)."
Building on an earlier program
The new policy builds upon the groundwork of the pilot program and responds to a need for more effective supervision and consumer protection, the Federal Reserve Board said in a press release. It is designed to improve the Federal Reserve's understanding of the consumer compliance risk that certain products and services may pose to the holding companies and consumers and to guide supervisory activity for these entities.
Compliance authority applies broadly
September 30, 2009