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Indiana provides broker-dealers with relief from branch examination regulation
On July 13, the Indiana Secretary of State, Securities Division, issued a compliance alert providing temporary relief from annual branch examination requirements. In light of the restrictions on travel caused by the pandemic, broker-dealers are not required to conduct an annual compliance examination in each branch office located in Indiana. However, a firm with the ability to conduct a remote branch examination during 2020 is encouraged to do so. Registrants are also reminded of their obligation to properly supervise agents and employees.
Minnesota Commerce Department issues guidance related to temporary resident insurance producer licenses
On July 10, the Minnesota Commerce Department issued Regulatory Guidance 20-34, which provides information relating to the issuance of temporary resident insurance producer licenses. The Minnesota Department of Commerce will issue temporary producer licenses to applicants who meet the requirements for resident licensure under Minnesota law without requiring examination or the submission of fingerprints, subject to conditions set forth in the guidance. To apply for the license, the sponsoring insurer or agency must submit the application on behalf of the temporary producer licensee. The license will be valid for 180 days, it may not be renewed or reinstated if it lapses, and it may not be converted to a regular producer license.
New York Division of Licensing Services issues updates regarding exams
The New York Department of State, Division of Licensing Services, has issued updates regarding licensing exams. The division will begin offering written exams at exam sites located in regions that are in Phase 3 of reopening beginning July 6 for candidates whose previously scheduled exams were cancelled. Exam candidates must schedule their exam date prior to appearing for an exam. Walk-in exams will resume on July 13.
Financial regulators issue examiner guidance on Covid-19
On June 23, the federal financial institution regulatory agencies (Federal Reserve Board, OCC, FDIC, and NCUA), in conjunction with the state bank and credit union regulators, issued interagency examiner guidance for assessing the safety and soundness of financial institutions in light of the Covid-19 pandemic. The joint guidance states that due to the “unique, evolving, and potentially long-term nature of the issues confronting institutions” from the Covid-19 pandemic, examiners will “exercise appropriate flexibility in their supervisory response.” The guidance acknowledges that Covid-19 can have an adverse impact on the financial condition and operational capabilities of financial institutions that have appropriate governance and risk management systems in place.
Among other things, the guidance notes that examiners will (i) “continue to assign supervisory ratings in accordance with the interagency CAMELS and ROCA rating systems”; and (ii) “assess the reasonableness of management’s actions in response to the pandemic given the institution’s business strategy and operational capacity.” The guidance also provides details on things such as capital adequacy and asset quality for examiners to consider when assigning composite and component CAMELS and ROCA ratings.
New York Department of Financial Services announces remote online testing for insurance licensing exams
On June 11, the New York Department of Financial Services announced that remote online proctored testing will be available beginning on June 15, 2020, for all 28 New York insurance licensing exams. As a result, candidates will be able to take exams at a testing center or from their home or office.
Federal Reserve Board resumes examinations for all banks
On June 15, the Federal Reserve Board announced the resumption of examination activities for all banks. Back in March, the board scaled back its examination activities in light of Covid-19 (previously covered here). The announcement anticipates that the board will continue to conduct exams offsite until conditions improve.
New Jersey Bureau of Securities begins annual examinations of investment advisors
On June 12, the New Jersey Bureau of Securities, within the Office of the Attorney General Division of Consumer Affairs, announced that its annual investment adviser examinations are underway. This year’s examination will include questions asking investment adviser firms, among other things, about the impact of Covid-19 on operations and the steps taken to protect senior investors. The examination intends to survey the impact Covid-19 has had on investment advisers and to assess their business continuity plans.
Virginia Bureau of Financial Institutions issues policy statement regarding Covid-19
The Virginia Bureau of Financial Institutions issued a policy statement encouraging supervised financial institutions to work constructively to mitigate the impacts of Covid-19 on Virginia consumers and businesses. The bureau advised licensees that data security, internal controls, and adherence to safe and sound lending practices are of paramount importance in alternative work programs. The bureau also will work with financial institutions when scheduling examinations and will place an increased emphasis on off-site reviews and examinations. The policy statement is effective through July 1, 2020, unless modified or withdrawn.
Louisiana Office of Financial Institutions, Securities Division, issues update on operations
On June 5, the Louisiana Office of Financial Institutions, Securities Division, extended through June 26, 2020 an earlier announcement regarding its operations during the statewide “stay at home” order, which we previously covered here. The announcement provides that: (i) paper copies of registration documents and payment of related fees can be mailed to the LOFI, and certain filings can be submitted electronically; (ii) examinations are being conducted remotely using phone and email correspondence in lieu of traditional on-site examinations; (iii) licensing staff continue to process licensing and registration applications through the CRD/IARD systems; and (iv) enforcement staff are limiting in-person contacts with witnesses and regulatory partners, and are using telecommunications technology to complete tasks remotely.
CFPB updates reverse mortgage servicing examination procedures
On June 1, the CFPB updated its reverse mortgage servicing examination procedures to incorporate current HUD regulations that provide the structure for Home Equity Conversion Mortgage (HECM) products. The updated procedures also add new exam questions to include issues raised in complaints submitted by older consumers. According to the Bureau’s summary, additions to the procedures include: (i) information regarding situations where a “servicer advances funds to pay for property taxes in any situation where the borrower was not behind on these payments”; (ii) guidance concerning a servicer’s timeliness in providing accurate payoff statements; (iii) new language under “Causes of Default” summarizing the circumstances under which an eligible non-borrowing spouse on an HECM loan may stay in the home after the borrower dies, for loans originated on or after August 4, 2014; and (iv) new language in the background section, which “incorporates HUD’s August 2017 regulatory changes that affected the ways in which lenders and servicers calculate the initial and annual mortgage insurance premiums,” as well as additional language “to provide a fuller description of reverse mortgages.”