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Episode Summary

In this episode, we break down the FDIC's latest Consumer Compliance Supervisory Highlights report, covering 2024 examination results and compliance trends. While focused on FDIC-supervised institutions, this principle-based guidance serves as an excellent roadmap for credit unions and all financial institutions.

Key Takeaways

Overall Performance

• 97% of FDIC-supervised institutions rated satisfactory or better for consumer compliance
• 800 consumer compliance examinations conducted in 2024
• Risk-focused examination approach targets areas with greatest potential for consumer harm

Top 5 Most Cited Violations (73% of all violations)

1. Truth in Lending Act (TILA) - 470 violations (37%)
   • Periodic statement disclosure failures
   • Good faith estimate timing issues
   • Loan cost breakdown requirements
2. Flood Disaster Protection Act (FDPA) - 143 violations (11%)
   • Failure to provide required flood insurance
   • 45% of FDPA violations related to this single issue
3. Truth in Savings Act (TISA) - 129 violations (10%)
   • Inadequate deposit account disclosures
   • Pre-opening disclosure failures
4. Electronic Fund Transfer Act (EFTA) - 122 violations (10%)
   • Error investigation procedure failures
   • Timing and reporting requirement violations
5. Home Mortgage Disclosure Act (HMDA) - 65 violations (5%)
   • Incomplete data collection and reporting
   • Missing required borrower and loan information

Enforcement Actions & Restitution

• 31 formal and 23 informal enforcement actions
• $5.6 million in civil money penalties
• $33.3 million in voluntary restitution to ~400,000 consumers
• 3 referrals to Department of Justice for discrimination violations

Consumer Complaint Trends

• 26,451 complaints closed (14% increase from 2023)
• 100% acknowledgment within 14 days
• 98.6% response rate within performance goals

Top Complaint Categories:

• Credit cards: 4,733 complaints (29%)
• Checking accounts: 3,152 complaints (19%)
• Installment loans/CLOC: 2,708 complaints (12%)
• Residential real estate: 844 complaints (5%)

Most Common Issues:

• Credit reporting disputes (18%)
• Transaction errors (9%)
• Accounts opened without knowledge (6%)
• Disclosure problems (6%)
• Service availability issues (5%)

Emerging Trends

• 13% increase in third-party provider-related complaints (4,282 cases)
• Growing vendor oversight challenges
• Persistent credit reporting and account opening issues
• Fair lending complaints decreased 9% (68 to 62 cases)

Key Compliance Areas for Focus

High-Risk Areas

• Disclosure Management: TILA, TISA, and HMDA reporting accuracy
• Operational Procedures: Flood insurance, error resolution processes
• Vendor Oversight: Third-party provider compliance monitoring
• Data Collection: HMDA and other regulatory reporting requirements

Proactive Strategies

• Implement robust disclosure review processes
• Enhance staff training on operational compliance
• Strengthen vendor management programs
• Monitor complaint trends as early warning indicators

Why This Matters for Credit Unions

While this report focuses on FDIC-supervised banks, the consumer protection laws and compliance principles apply broadly across financial services. Credit unions can use these insights to:

• Benchmark their compliance performance
• Identify potential risk areas before they become problems
• Enhance training and procedures in high-violation areas
• Improve vendor management practices

Resources Mentioned

• FDIC Consumer Compliance Examination Manual
• Federal Financial Institutions Examination Council (FFIEC) Rating System
• FDIC National Center for Consumer and Depositor Assistance

Host Notes

This episode provides actionable insights for compliance professionals, with extensive use of direct quotes from the FDIC report to ensure accuracy. The data shows that while most institutions are performing well, concentrated issues in specific areas offer clear opportunities for improvement across the industry.

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