Regulators Turn Up Heat on Vendor Management
The Scotsman GuideElizabeth E. McGinn, Moorari K. Shah
The vendor landscape for companies in the mortgage industry has shifted significantly in recent years. State and federal regulators have levied hefty and often unprecedented fines against a number of supervised institutions because of inadequate vendor-management policies and ineffective vendor oversight.
The Consumer Financial Protection Bureau (CFPB), four years old as of July, has been particularly aggressive in its enforcement activities against companies for alleged failures to ensure that tasks performed by service providers comply with applicable laws and regulations.
Equally vigilant are state regulators and the primary federal banking regulators — the Federal Reserve Board (FED) and the Office of the Comptroller of the Currency (OCC). These regulatory agencies also have demonstrated a laser-like focus in singling out companies for their lack of attentiveness to various risks presented to consumers and to financial markets when compliance responsibilities are outsourced to third-party service providers.
This era of heightened regulatory scrutiny has resulted in several new realities for institutions that rely on external vendors.
Orgininally published in the August 2015 issue of The Scotsman Guide. Reprinted with permission.