Product Updates for July 2023
The Product Updates for July 2023 from BankPolicies.com feature the following new and revised policy template products:
Asset Management Policy Template – NEW!
These new and revised products were developed and revised in response to OCC Bulletin 2023-20 entitled “Asset Management: Updated Comptroller’s Handbook Booklet and Rescissions” dated 06/22/23 that announced version 1.0 of the “Asset Management” booklet of the Comptroller’s Handbook. This booklet provides an overview of the asset management business and guidance on sound risk management processes, and is a targeted update that clarifies the OCC’s expectations with respect to fiduciary audit requirements. In addition, this update provides for consistency during OCC’s examination of bank fiduciary audit activities. The OCC intends to publish a more extensive and comprehensive update to the entire booklet at a later date. The updated booklet replaces the booklet of the same title issued December 2000.
Commercial Real Estate Loan Policy Template
Non-Accrual and Charged-Off Loan Policy Template
These products were revised in response to the Joint Press Release entitled “Agencies Finalize Policy Statement on Commercial Real Estate Loan Accommodations and Workouts” dated 06/29/23 that issued a final policy statement on commercial real estate loan accommodations and workouts. The updates reinforce and build on existing supervisory guidance calling for financial institutions to work prudently and constructively with creditworthy borrowers during times of financial stress.
The statement is substantially similar to a proposal issued last year and includes minor changes in response to comments. The statement updates and supersedes the previous guidance on commercial real estate loan workouts issued in 2009.
The statement includes a section on short-term loan accommodations that was not included in the previous guidance. An accommodation includes an agreement to defer one or more payments, make a partial payment, or provide other assistance or relief to a borrower who is experiencing a financial challenge. Additionally, the statement addresses recent accounting changes for estimating loan losses and provides examples of how to classify and account for loans affected by workout activity.
The statement applies to all financial institutions supervised by the agencies.
Financial Technology Company Providers Policy Template
Foreign Service Providers Policy Template
Independent Consultant Policy Template
Managed Security Service Providers Policy Template
Third-Party Payment Processors Policy Template
Vendor Management Program Policy Template
The update to these products is in response to the Joint Press Release from the Federal Reserve Board, FDIC, and OCC entitled “Agencies Issue Final Guidance on Third-Party Risk Management” dated 06/06/23 that announced final joint guidance designed to help banking organizations manage risks associated with third-party relationships, including relationships with financial technology companies.
The final guidance:
- Describes principles and considerations for banking organizations’ risk management of third-party relationships;
- Covers risk management practices for the stages in the life cycle of third-party relationships: planning, due diligence and third-party selection, contract negotiation, ongoing monitoring, and termination;
- Includes illustrative examples to help banking organizations, particularly community banks, align their risk management practices with the nature and risk profile of their third-party relationships. The agencies plan to engage with community banks immediately and develop additional resources in the near future to assist them in managing relevant third-party risks;
- Replaces each agency’s existing general third-party guidance (such as the Federal Reserve Board’s 2013 guidance, the FDIC’s 2008 guidance, and the OCC’s 2013 guidance and its 2020 frequently asked questions) and promotes consistency in the agencies’ supervisory approaches toward third-party risk management; and
- Streamlined language and improved clarity based on the agencies’ consideration of public comments on the proposed guidance released in July 2021.
Given the broad, principles-based approach of this guidance, the agencies have not revised the guidance to address specific topics or types of relationships. Separate guidance on certain topics or relationships already exists; these types of specific guidance issuances, unless expressly rescinded, would remain unaffected by this guidance. While certain topics are not explicitly discussed in the final guidance, the broad-based scope of the guidance captures the full range of third-party relationships.
The update to this product is in response to FDIC FIL-32-2023 entitled “FDIC Clarifying Supervisory Approach Regarding Supervisory Guidance on Multiple Re-Presentment NSF Fees” dated 05/16/23 to clarify its supervisory approach for corrective action when a violation of law is identified.
Since the issuance of the Supervisory Guidance on Multiple Re-Presentment NSF Fees (FIL-40-2022), steps financial institutions have taken to remediate consumer harm associated with re-presentment fees have provided the FDIC with additional data about the amount of consumer harm associated with the issue at particular institutions and on-going and extensive challenges in accurately identifying harmed parties.
Based on this additional data and experience, the FDIC is updating and reissuing its Supervisory Guidance on Multiple Re-Presentment NSF Fees (FIL-40-2022) to reflect our current supervisory approach to not request an institution to conduct a lookback review absent a likelihood of substantial consumer harm.
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