Pub. 4 2016 Issue 2

www.uba.org 16 B ankers operate in a highly regulated environment, and regulatory exam- inations are a necessary ingredient for maintaining a safe and sound finan- cial system. As we all know, though, examinations can often go awry for a myriad of reasons, and recent observa- tions suggest that we are at risk of veering away from the collaborative approach to much more of a regulatory “gotcha” mentality. As you may be aware, the Regulatory Feedback Initiative (RFI) consists of an anonymous electronic survey for bankers to provide an assessment of their most recent examination or visitation. The in- formation is aggregated and analyzed on a national level to improve the regulatory examination process for banks through two fronts: Survey results are communicated to bank regulators on a routine basis when unique examination trends are discovered, and Custom bank reports are available to banks to aid them in preparing for an upcoming exam by identifying trending areas of focus or criticism. Created by The Coalition of Bankers As- sociations in 2011, banks have provided feedback on over 3,000 examinations. In 2015, FinPro joined this important effort to assist with analyzing the data generat- ed by RFI and provided suggestions for improving the survey. The Coalition’s Assess Your Examination Process: Tell us the Good, Bad, and Ugly! By Scott Polakoff, Executive Vice President, and Stephen Brown Klinger Director, FinPro Inc. leadership, working closely with FinPro’s advanced analytic group and staff of former senior regulators, has streamlined the survey process and improved the relevance of questions. The enhanced survey that rolled out in May 2016 has cut the number of questions by almost 50 percent, which is projected to reduce the average survey completion time from 27 minutes to less than 15 minutes. While this new platform is very exciting, its usefulness is determined by banker in- volvement. The survey results truly make a difference, and we wanted to share with you some examples of how the RFI survey provides actionable feedback. Below are three items that, based on the responses generated by banks in the sur- vey, the regulatory agencies should Start, Stop, and Continue: Start: Create an appeals process that eliminates any concerns of regulatory retaliation. The Riegle Community Development and Regulatory Im- provement Act of 1994 required that all regulatory agencies construct an appeals process that attempts to remedy contested filings. RFI data shows a high correlation where banks reported being “unsatisfied” or “extremely unsatisfied” with their examination to whether or not the “examination resolved issues and rec- ommended corrective action in a fair and reasonable manner.” Bankers’ comments yearn for a healthy appeals process that is standardized across agencies and void of regulatory retaliation. From an article published in the American Banker on April 8, 2015, titled Fear of Retaliation Stifles Banks’ Appeals to Regulators, FinPro’s suggestions for improvement are simple and easy to implement. First, examination standards and findings should be the same regardless of an FDIC, OCC, or FRB examination team. Second, appeals should be reviewed and resolved by an interagency group of senior executives. Third, appeals should have all names and identifiable informa- tion redacted before submission to the interagency group. Decisions should be made based on the facts of the case. Stop: Only 25% of the banks respond- ing to the RFI agreed that “examiners applied ‘guidance’, as opposed to enforce- able regulation, appropriately” during