Issue 4. 2022 9 space are not ready for the handling and discernment between items and when it is a representment instead of a newly presented item. Some vendors have reported updates will not be ready until 2023 for this issue; some could be as late as midyear. This is the immediate issue, and institutions cannot be expected to review each NSF manually. Until a solution is presented, there will continue to be a risk for the institutions. The question is, what can you do now to help minimize the UDAAP risk? The FDIC addressed its approach in the guidance issued as follows: “When exercising supervisory and enforcement responsibilities regarding multiple representment NSF fee practices, the FDIC will take appropriate action to address consumer harm and violations of law. The FDIC’s supervisory response will focus on identifying representment-related issues and ensuring correction of deficiencies and remediation to harmed customers. In reviewing compliance management systems, the FDIC recognizes an institution’s proactive efforts to self-identify and correct violations. Examiners will generally not cite UDAP violations that have been self-identified and fully Shaun Harms serves as the principal for the Financial Services Practice out of FORVIS’ Little Rock office. His expertise is within the regulatory compliance area and focuses on community financial institutions. He has 19 years of consulting experience and has worked with more than 100 banks with their compliance and Bank Secrecy Act (BSA) programs and is a featured speaker at many events. In reviewing compliance management systems, the FDIC recognizes an institution’s proactive efforts to selfidentify and correct violations. corrected prior to the start of a consumer compliance examination. In addition, in determining the scope of restitution, the FDIC will consider an institution’s record-keeping practices and any challenges an institution may have with retrieving, reviewing, and analyzing re-presentment data, on a case-by-case basis, when evaluating the time period institutions utilized for customer remediation. Failing to provide restitution for harmed customers when data on re-presentments is reasonably available will not be considered full corrective action. If examiners identify violations of law due to re-presentment NSF fee practices that have not been self-identified and fully corrected prior to a consumer compliance examination, the FDIC will evaluate appropriate supervisory or enforcement actions, including civil money penalties and restitution, where appropriate.” Therefore, if you are an FDIC-supervised institution, you need to be proactive and try to identify potentially harmed customers and develop a plan for corrective action. This may include a lookback for restitution. If you are not an FDIC-supervised institution, you should remain on high alert because this has escalated quickly and could with the other agencies as well. n www.rqn.com 801.532.1500 RQ&N_Tingey Award Print Ad_Final.indd 1 11/9/22 2:22 PM 1. fdic.gov/news/financial-institution-letters/2022/fil22040.html
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