The Office of the Comptroller of the Currency (the “OCC”) has released supplemental examination procedures on third party risk management. The procedures apply to national banks and federal savings associations of all sizes. They supplement OCC Bulletin 2013-29, which governs the risk management frameworks maintained by OCC-regulated banks in establishing, monitoring and concluding third party relationships (including relationships with bank affiliates).
While more detailed and specific than Bulletin 2013-29, the examination procedures reflect many concepts that will be familiar to banks. However, the procedures also emphasize new points. Of particular interest, the procedures include new language targeting specific types of third parties, including financial market utilities and marketplace lenders.
The procedures do not provide detailed information explaining how OCC examiners will assess bank relationships with financial market utilities, but they do direct examiners to “assess how the bank monitors, manages, and limits [credit] exposures” to such utilities.
In connection with marketplace lenders, and also with other third parties involved in the bank’s lending processes, the guidance instructs examiners to pay particular attention to the quality of the bank’s underwriting and consumer compliance controls. It also instructs examiners to consider whether such third parties employ nontraditional underwriting methods (although it does not comment substantively on whether and when such nontraditional underwriting methods may be appropriate).
The new language on marketplace lenders reflects a broader push by the Federal banking agencies to regulate bank lending relationships. In July 2016, for example, the FDIC issued proposed examination guidance on third party lending relationships, and the CFPB announced in March 2016 that it would begin accepting complaints from consumers with respect to marketplace lenders.