The “Interagency Statement on Retail Sales of Nondeposit Investment Products” ( dated February 15, ), formerly contained in section the OCC specifically incorporates the “Interagency Statement on Retail Sales of Nondeposit Investment Products” issued by the Federal. Sale of Uninsured Debt Obligations and Securities Issued by Bank Holding Interagency Statement on Retail Sales of Nondeposit Investment Products.
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To measure risk, banks are expected to use measurement systems and models appropriate for the nature and complexity of the RNDIP sales program and should periodically test the measurement systems. The OCC expects each bank to “identify, measure, monitor, and control risk by implementing an effective risk management system appropriate for its size and the complexity of its operations. Third-party risk management Qualification and training requirements for bank personnel and supervisors, as well as third-party sales representatives who will recommend or sell RNDIPs Compensation arrangements that comply with applicable regulations GLBA, Regulation R, 12 C.
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This article is provided as a general informational service starement it should not be construed as imparting legal advice on any specific matter. In addition, banks pdoducts adopt comprehensive compliance policies and procedures that address applicable regulations and guidance, including the Interagency Statement.
The compliance program should also incorporate a system to monitor customer complaints and their resolution. More clarity regarding specific OCC expectations and methods for implementing the guidance in the Booklet will be revealed through upcoming examination cycles. Insurance Laws and Products. There are several aspects of the Booklet that are particularly noteworthy or warrant special mention.
These requirements are extensive and unlikely to be satisfied with existing networking arrangements. The Invesgment major implication is that a bank that engages in an RNDIP sales program should expect increased scrutiny of the program and should be prepared to document and demonstrate inyeragency written policies and procedures, board and management oversight records, and other means that the bank is adequately assessing and managing any risks presented by the RNDIP.
Risk-Management Program The OCC expects each bank to “identify, measure, monitor, and control risk by implementing an effective risk management system appropriate for its size and the complexity of its operations. News About this Firm. Real Estate and Salles. As mentioned inteagency, the Booklet reflects the OCC’s heightened expectations regarding the adequacy of banks’ compliance and risk-management programs and the need for banks to develop detailed written compliance plans tailored to the complexity of their RNDIP sales activities.
Media, Telecoms, IT, Stateemnt. The Interagency Statement is still alive and well: To the extent the bank has clients that may be vulnerable to a broker’s hard sell, the bank should have procedures in place to ensure that these customers are not sold inappropriate investments.
The OCC emphasizes compliance with the Interagency Statement, Regulation R, and the antifraud provisions of federal securities laws investmennt 10 of the Securities Stateement Act and Rule 10b-5 and a bank’s obligation to take reasonable steps to ensure that any third-party broker-dealer complies with applicable securities laws and Financial Industry Regulatory Authority FINRA rules.
To that end, the examination procedures set forth in the Booklet, as well as the sample request letters contained in Appendix I to the Booklet, will provide useful guidance to banks as to the likely scope of information requests that will precede their next exam. In other words, banks cannot abdicate their oversight and compliance responsibilities to the affiliated or third-party broker-dealers and must conduct their own independent analysis of RNDIPs, particularly the suitability of the products for the banks’ customers.
Banks should pay particular attention to the guidance and expectations regarding disclosures and advertising because those aspects of compliance are easily reviewed and tested by examiners.
Overall, the Booklet will be a useful reference tool for banks, broker-dealers, insurance agents, and registered investment advisers that engage in bank RNDIP sales programs as they modify and adjust their risk management of the RNDIP sales program.
The OCC states that the Booklet itself is intended to explain “the risks inherent in banks’ retail nondeposit investment product RNDIP sales programs and provide a framework for banks to manage those risks.
Credit risk can also arise if a bank advances payments to client accounts even intraday or allows overdrafts in client accounts. Banks’ boards of directors must establish the banks’ strategic direction and risk tolerance with respect to any RNDIP sales program and communicate the same through policies and procedures that establish responsibility and authority.
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Do you have a Question or Comment? In addition to the compliance obligations associated with these lending activities, the bank needs to monitor and manage its credit exposures. Mine Financing In – Video. The Booklet emphasizes that, because of the changes enacted by the Dodd-Frank Act, offering off-exchange swaps and foreign-exchange transactions to retail customers presents heightened risk to a bank, particularly with respect to possible inadvertent aiding and abetting violations of the Commodity Exchange Act.
jondeposit Although it was adopted almost 21 years ago, the Booklet demonstrates the Interagency Statement’s durability and continued relevance for bank RNDIP activities.
Reputation risk may be increased if the RNDIP program actively associates a bank’s name with the offered products and services, including the offering of bank-branded products. However, the Booklet identifies the rule as “an appropriate reference for a retqil compliance program designed to ensure that the bank’s sales of RNDIPs are operated in a safe and sound manner. Virtual currencies and the underlying blockchain technology has a profound potential to be a driver of economic growth. The Booklet emphasizes the need for banks to retain qualified counsel to help assess and manage the risk by ensuring compliance with applicable regulations.
The Booklet replaces the previous booklet of the same name that was issued in February Risk-Management Categories As mentioned above, the Booklet reflects the OCC’s heightened expectations regarding the adequacy of banks’ compliance and risk-management programs and the need for banks to develop detailed written compliance plans tailored to the complexity of their RNDIP sales activities.
The Booklet contains extensive discussion about permissible compensation arrangements and referral fees.
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Events from this Firm. The Booklet details the OCC’s new expectations of third parties that provide RNDIPs through bank distribution channels and focuses on the terms to be contained in networking agreements with banks.
The bank’s management and oversight of its RNDIP program should be able to respond rretail and incorporate regulatory reforms and changes in the brokerage industry, and the bank’s strategic goals with respect to its RNDIP program should reflect, as appropriate, changes in market conditions.
RNDIP is defined as “any product with an investment component that, in most instances, is not an FDIC-insured deposit” and includes mutual funds, exchange-traded funds, annuities, equities, and fixed-income securities Booklet, p. In this respect, the Booklet shows that basic regulatory attitudes about bank retail securities activities have not materially changed since Both banks that directly engage in investmenh sale of retail nondeposit investment products RNDIPs and bank-affiliated or unaffiliated broker-dealers, insurance agents, and registered investment advisers that provide services and products to certain customers on behalf of banks will need to become familiar with the supervisory expectations set out in the Booklet and incorporate, as needed, recommended business and information-sharing practices into their operations.
The Booklet reflects the OCC’s emphasis on the importance of strong and effective risk-management integagency, which continues a regulatory theme articulated by the OCC in recent years.