OCC Issues Updated Booklet “Unfair or Deceptive Acts or Practices and Unfair, Deceptive, or Abusive Acts or Practices“

On June 29, 2020, the OCC released its updated examination procedures concerning the  UDAP/UDAAP booklet. The booklet provides expanded procedures to assist examiners in evaluating UDAP and UDAAP risks and in assessing associated risk management (including evaluating a bank’s CMS). This booklet is structured consistent with inter-agency consumer compliance and is a good guide for updating and establishing a UDAP/UDAAP risk management program for your institution.

The risks associated with UDAP and UDAAP are compliance, credit, operational, strategic, and reputation. The consequences of engaging in UDAP or UDAAP can include litigation, enforcement actions (including civil money penalties [CMP]), and monetary restitution.

Some of the UDAP/UDAAP red flags discussed in the booklet include:

  • Customer complaints. Complaints can reveal a weakness in a particular product or service or can identify customers’ dissatisfaction with or lack of understanding of products or services, including products offered or services performed by third parties.
  • Whistleblower referrals. Examples of whistleblower referrals that would indicate increased UDAP or UDAAP risk or the likelihood of potential UDAP or UDAAP issues include those that focus on the institution’s marketing or sales practices or disclose the failure of the institution to deliver products or services as promised.

Read more about the UDAP/UDAAP red flags below.