United States: Proposed Revisions To US Consumer Compliance Rating System Emphasize Compliance Management Systems

On April 29, 2016, the Federal Financial Institutions Examination Council ("FFIEC") released a proposal to revise the existing Uniform Interagency Consumer Compliance Rating System (the "CC Rating System").1 If adopted, the new CC Rating System would be used by prudential regulators2 and the Consumer Financial Protection Bureau ("CFPB") in determining supervised entities' consumer compliance ratings.

The FFIEC notes that the proposed changes are designed to better reflect agencies' risk-based approach to examinations and changes to the legislative, regulatory, supervisory, technological and market environment since the CC Rating System was introduced in 1980. Although the ratings scale of 1 to 5 would not change under the proposal, the factors used by examiners in determining ratings would be different. As described in greater detail below, the new framework emphasizes the effectiveness of institutions' compliance management systems ("CMS") in managing compliance risk and preventing violations of law.3 The current CC Rating System evaluates many of the same factors, such as management's commitment to compliance and adequacy of internal controls, but has historically viewed those items from a more transactional perspective. The proposed changes would require examiners to evaluate consumer compliance from a more formalized, systemic perspective. The proposed changes provide more detailed guidance on the elements of a CMS that examiners will expect to see.

The 12 new assessment factors are divided into three categories: (1) board and management oversight, (2) compliance program, and (3) violations of law and consumer harm. Institutions would receive a single overall rating, rather than a numeric rating for each factor. Institutions would also be eligible for incentives for preventing, self-identifying, and addressing consumer compliance violations.

Board and Management Oversight. Under the proposed CC Rating System examiners would assess board and management oversight using the following four factors:

  • Oversight and commitment to risk management, including devoting resources to compliance functions, ensuring accountability in compliance roles and performing comprehensive and ongoing due diligence of third parties.
  • Change management, including prompt responses to, and due diligence in handling, changes in external factors (e.g., applicable laws and regulations and market changes) and internal factors (e.g., products and services offered).
  • Comprehension, identification and management of risks associated with offered products and services, including emerging risks.
  • Corrective action and self-identification, including responding to and remediating deficiencies.

Compliance Program. Under the proposed CC Rating System examiners would assess institutions' compliance programs using the following four factors:

  • Adoption of policies and procedures that are appropriate to the risk in the products, services and activities of the institution and ensuring that third-party relationship management programs are strong.
  • Training that is current, timely, proactively updated and appropriately tailored to the responsibilities of those receiving it.
  • Monitoring and/or audit (if applicable) that is comprehensive, timely and tailored in order to measure material compliance risks throughout the institution.
  • Consumer complaint handling that is responsive and effective and that involves management monitoring for potential consumer harm and deficiencies.

Violations of Law and Consumer Harm. The proposal emphasizes that the "consumer harm" that could raise supervisory concerns includes not just financial harm, but also harm to consumers particularly under fair lending laws, laws prohibiting unfair or deceptive acts or practices4 and the Servicemembers Civil Relief Act.5 Under the proposed CC Rating System examiners would assess how institutions handle violations of law and consumer harm using the following four factors:

  • Root causes and whether the identified violations of law reflect weaknesses in the institution's CMS.
  • Severity of the harm to the consumer.
  • Duration of the violations and whether they were addressed in a timely manner by management.
  • Pervasiveness of the violations, including the number of consumers affected and whether the violations occurred across different products and services.

Incentives. The proposed CC Rating System would provide incentives to institutions for self-identifying violations of law and consumer harm. In particular, institutions' ratings would be credited for early detection of compliance issues, prompt self-reporting of serious violations and appropriate corrective actions including programmatic changes and full redress for consumer injuries.

Ratings. Institutions subject to the proposed CC Rating System would continue to receive a rating of 1 to 5, with a rating of 1 reflecting a strong CMS that takes action to prevent violations of law and consumer harm and a rating of 5 reflecting a CMS that is critically deficient at managing consumer compliance risk and preventing violations of law and consumer harm. Under the proposed framework, ratings would account for the size, complexity and risk profile of the institution. In proposing the new CC Rating System, the FFIEC acknowledged that the sophistication and formality of an institution's CMS are affected by these factors.

Timing. Comments on the proposed revisions to the Uniform Interagency CC Rating System are due by July 5, 2016. Comments can be submitted via Regulations.gov under Docket Number FFIEC-2016-0001.

In anticipation of the new CC Ratings System, supervised institutions should consider evaluating their own CMS against the proposed assessment factors.


1 Uniform Interagency Consumer Compliance Rating System, 81 Fed. Reg. 26553 (proposed May 3, 2016).

2 The prudential regulators are the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency.

3 The FFIEC notes that the proposal does not create new or higher supervisory expectations.

4 15 U.S.C. 45 et seq.

5 50 U.S.C. App. 501-697b.

Originally published May 6, 2016

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2016. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions