The U.S. responded by shifting many consumer protection responsibilities from existing banking regulators to a newly created agency dedicated to consumer protection. We believe the Consumer Financial Protection Bureau, endowed with sweeping new powers and a broad mandate to ensure consistent application of consumer protections across banks and nonbanks, will have a significant impact on the financial services industry.
Promontory has been at the forefront of developments in this area. Retained by some of the largest mortgage servicers in the country, Promontory has been actively engaged in evaluating the foreclosure and loss mitigation practices of these servicers and helping them identify and remediate financial injury to borrowers. This work gives us considerable insight into successful strategies to satisfy new and evolving regulatory expectations for mortgage servicing practices.
Promontory also has extensive experience working with clients and regulators to respond to other regulatory concerns in the consumer area, including enforcement actions related to fair lending, as well as unfair and deceptive acts and practices. Our experts’ regulatory backgrounds give them unique knowledge and understanding of the expectations of the regulatory agencies, including the CFPB. We expect the CFPB to vigorously pursue enforcement and examination, including abusive acts or practices. For nonbanks unfamiliar with examination by a federal regulator, the CFPB’s examination authority will pose unfamiliar challenges. Promontory has worked with many nonbanks in the past to prepare them for federal regulatory scrutiny, including conducting mock examinations led by former federal regulators.
Core Products & Services
Promontory offers products and services in the following areas:
Risk Management, Compliance, and Governance
Many of our offerings are designed to support providers of consumer financial products and services throughout all phases of consumer-compliance examinations and enforcement activity.
In anticipation of regulatory examinations or investigations, we offer:
- Baseline reviews of compliance risk-management programs to evaluate:
- Compliance risks across all lines of business and by regulatory mandate
- Policies, procedures, and internal controls
- Core program elements, such as risk-assessment methodology and protocols for monitoring, testing, training, reporting, and corrective action
- Governance structure, including executive and board oversight and reporting
- Complaint management
- Compliance risk assessments and gap analyses to:
- Identify products, services, and processes that expose regulated institutions to consumer-compliance risk
- Evaluate disclosures, marketing materials, websites, call-center scripts and recordings, and other materials for regulatory and reputational risk
- Evaluate internal controls and compliance risk-governance routines
- Assess the effectiveness of compliance controls, through transaction testing using applicable regulatory procedures and guidance
- Review oversight of affiliated and third-party service providers
- Mock examinations to test the ability of firms and key stakeholders to manage an examination by:
- Preparing a request letter for use in gathering and organizing documents
- Reviewing documents, including policies and procedures, audit reports, disclosures, marketing materials, websites, and third-party arrangements for regulatory and reputational risk
- Interviewing key staff
- Assessing the compliance-management system and specific business practices or processes using examination manuals and guidance of the applicable agencies
- Identifying weaknesses in existing policy, procedures, and controls, as well as gaps requiring corrective action
- Conducting examination-preparedness training
- Investigating issues that have potential regulatory implications and making recommendations for a full range of corrective action
During and after examinations and enforcement actions, we:
- Formulate responses to agency requests and inform negotiations regarding requirements of informal or formal enforcement actions
- Design corrective action and remediation plans responsive to regulatory expectations, including:
- Implementing specific regulatory requirements (ranging from MRAs to MOUs and consent-order provisions)
- Enhancing oversight of the board and senior management
- Updating policies, procedures, and controls
- Calculating restitution
- Process reengineering
- Advise on, implement, and validate remediation tasks
Transactional Reviews, Testing and Statistical Analysis, and Compliance Support Services
We execute projects that demand substantive regulatory expertise and applied know-how, including:
- Agency-mandated independent reviews
- Statistical disparate-treatment or disparate-impact risk assessments, including conducting proxy studies and matched-pair analyses
- Transaction testing across the full range of consumer financial products and services
- Validation of the quality and completeness of remediation-plan deliverables
- Developing technologies to simplify implementation and maintenance of compliance protocols and to facilitate enterprise-wide aggregation, reporting, and integration of compliance risk-management functions, such as issue tracking
- Comprehensively assessing how consumers experience a firm’s products and services and helping firms improve marketing materials, disclosures, sales scripts, websites, and other transparency tools to enhance that experience
- Providing compliance training, including designing training programs and courses and conducting seminars and workshops for directors, management, and staff at all levels.
Strategic Advice
We provide wide-ranging strategic advice to help our clients in all facets of their businesses. We can help clients navigate changing regulatory expectations by:
- Analyzing the impact of regulatory reforms to identify where changing expectations require new data analytics and systems, product redesign, and process reengineering
- Redesigning products, processes, services, and compliance programs to implement new regulatory requirements or other relevant changes
- Advising on the implications of proposed rules and assisting with the crafting of comment letters responsive to the client’s business concerns and respectful of the agency’s objectives
We can help clients secure regulatory approval for innovative products by:
- Evaluating new consumer products for regulatory and reputational risk
- Restructuring consumer-finance business models for compatibility with regulatory oversight
- Designing the governance framework needed to conduct business as a regulated institution
We can inform clients’ strategic decision-making about protecting their brands and expanding their businesses by:
- Conducting regulatory diligence in the context of proposed mergers and acquisitions, recruitment of new service providers, and process reengineering
- Developing compliance and regulatory communications strategies
- Evaluating regulatory implications of downsizing and outsourcing strategies