New Set of Guidelines Brought In By OCC with Regard to the Appointment of Bank Consultants

Banker Resource
November 13, 2013 — 1,434 views  
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New changes have been introduced in the standards for banks that hire independent consultants while under any sort of enrollment action. These new standards were recently issued by the Office of the Comptroller of the Currency. This latest guidance directs when a thrift or bank under any sort of enrollment action must appoint an independent consultant and also whether the work meets the standards of OCC.

Apart from that, the guidance also gives details regarding proper due diligence procedures which banks will have to follow while appointing a consultant. Additionally, it also explains how banks are supposed to monitor the work of the consultant with the help of a contract.

This new set of standards were brought in after the recent political and regulatory controversy that cropped up over the work of certain consultants with flopped reviews which lead to weaker compliance oversight.

Getting the Best of Out of the Consultants

Thomas Curry, Comptroller of the Currency, said in a recent press release that if independent consultants are properly used by banks, they can help a great extent in significant supervisory objectives, especially in relation to the enforcement actions. He further mentioned that though consultants can help banks by giving expertise, knowledge as well as additional resources, care must also be taken to make sure that they are subject to suitable oversight and also need to maintain their independence.

Lastly, he said that the new standards that have been chalked out will help in achieving these vital objectives while making sure that the conclusion given by the consultant is not substituted for the supervisory oversight of the OCC.

Concerns Bothering the Regulators

One of the main concerns that regulators had were direct conflicts like use of a consultant who has already reviewed procedures or transactions that are related to the enforcement action. But the guidelines given by OCC have also acknowledged that it is not possible to get rid of conflicts of interest all together and that they might crop up every now and then.

The OCC also cautioned banks that are using an independent consultant that such practice ‘does not absolve’ the bank management as well as the directors from their responsibility of ensuring that the bank is following the enforcement order. The agency also warned that an independent consultant hired by the bank is not to be considered as an alternative to the regulatory judgment given out by the OCC.

Banker Resource