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From Banking and Finance Law Daily, June 1, 2015

OCC slaps Bank of America with $30M penalty for failing to protect servicemembers

By Katalina M. Bianco, J.D.

The Office of the Comptroller of the Currency has assessed a $30 civil money penalty against Bank of America, N.A. for violations of law and unsafe or unsound practices in connection with the bank’s non-home loan compliance with the Servicemembers Civil Relief Act and unsafe or unsound practices in connection with non-home debt collection litigation practices. The OCC ordered remediation to approximately 73,000 affected customers.

The OCC said the action is intended to correct deficiencies in the bank’s SCRA compliance program practices and procedures and to address the preparation and notarization of affidavits and other sworn documents used in the bank’s debt collection litigation.

Comptroller findings. The OCC laid out its specific findings in its consent order. The agency determined that in its efforts to comply with the SCRA, Bank of America:

  • failed to have effective policies and procedures in place across the bank;

  • did not devote sufficient funding, staffing, or managerial resources to ensure proper administration of SCRA compliance processes;

  • failed to devote adequate internal controls, compliance risk management, internal audit, third party management, and training to its SCRA compliance processes; and

  • engaged in violations of the SCRA.

In terms of the bank’s document and collection litigation processes, Bank of America:

  • filed affidavits executed by employees or third-party services that were not based upon personal knowledge or a review by the affiant of relevant books and records;

  • filed numerous affidavits without following proper notary procedures;

  • failed to devote sufficient financial, staffing, and managerial resources to ensure proper administration of its sworn document and collections litigation processes; and

  • failed to sufficiently oversee outside counsel and third-party providers handling sworn document and collection litigation services.

Unsafe and sound practices were the result of deficiencies in the bank’s enterprise compliance risk management function, including deficiencies with respect to independent testing, governance routines, risk assessment, and oversight, the OCC charged.

Further provisions of order. In addition to the $30,000,000 civil money penalty, Bank of America agreed to:

  • appoint and maintain a Compliance Committee of at least three directors of the bank of which a majority may not be employees or officers of the bank or any of its subsidiaries or affiliates;

  • submit an acceptable plan, including timetables, outlining a description of actions that are necessary and appropriate to achieve compliance with the order; and

  • take no action that deviates from the plan without prior written notice of “no supervisory objection” from the Deputy Comptroller.

Within 90 days of the effective date of the order, Bank of America must submit a compliance risk management plan with respect to the bank’s compliance with all applicable laws, regulations, and regulatory guidance. Within 60 days, Bank of America must conduct a written, comprehensive assessment of the Bank’s risks in SCRA compliance operations, including, but not limited to, operational, compliance, legal, and reputational risks and submit a plan to manage or mitigate identified risks.

Bank of America statement. In a statement addressing the consent order, Bank of America noted that the issues giving rise to the OCC’s action were discovered by reviews that began in 2011. Since that time, the bank states that it has “enhanced its collections litigation and sworn documents processes and enhanced controls around SCRA across the company” and “is building upon a number of initiatives already underway to better manage compliance risk going forward.” The bank said it has taken steps to meet and exceed that required by law.

Companies: Bank of America

MainStory: TopStory DebtCollection EnforcementActions Loans SCRA UDAAP

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