Regulatory change: Challenges continue, but opportunities exist

Posted by Irena Gecas-McCarthy, Advisory Principal, Deloitte & Touche LLP, Chris Spoth, Advisory Managing Director, Deloitte & Touche LLP, David Wright, Advisory Managing Director, Deloitte & Touche LLP, Monica Lalani, Advisory Principal, Deloitte & Touche LLP Ken Lamar, Independent Senior Advisor to Deloitte & Touche LLP, Richard Rosenthal, Advisory Senior Manager, Deloitte & Touche LLP, and Alex LePore, Advisory Senior Consultant, Deloitte & Touche LLP on August 30, 2016

Overview

Regulators have consistently communicated their high expectations for large foreign banking organizations (FBOs) operating in the US.  Underlying these expectations is the assumption that FBOs will understand, appropriately respond to, and comply with regulations and guidance affecting the totality of their US operations, now in the forms of Intermediate Holding Companies (IHCs) and US branches and agencies.  To have sufficient time to respond to, and integrate, new requirements, FBOs should gain an early understanding of new regulatory developments at the proposal stage, evaluate their impact on US operations, comment, and, when finalized, shift to an implementation mode that builds and integrates these new capabilities into business-as-usual operations.

Large FBOs, in particular, are already subject to recovery and resolution planning (RRP), liquidity reporting, liquidity stress testing, governance, and risk management requirements, among others, and are expected to holistically meet regulatory reporting, capital planning, and stress testing requirements.  The Federal Reserve Board’s (FRB) final rule1 establishing enhanced prudential standards significantly raised the stakes for FBOs to effectively meet regulatory requirements.

Continue reading “Regulatory change: Challenges continue, but opportunities exist”

CFPB seeks to enhance complaint database by allowing consumer feedback on complaint handling process

Consumers will be able to rate how an institution resolves their complaint

On August 1, 2016, the Consumer Financial Protection Bureau (CFPB) published1 a notice and request for comment in the Federal Register on a proposal to enhance its consumer complaint database.  The change would allow consumers to rate an institution’s performance in handling and responding to a consumer’s complaint.  The proposed enhancement, which could impact an organization’s reputational risk, is intended to give consumers the option to highlight an institution’s positive behavior when resolving a consumer complaint by using a one to five rating scale with an option to provide a narrative to support the consumer’s rating.  Comments must be submitted on or before September 30, 2016.

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A closer look at a new anti-discrimination rule

Putting the ACA’s Section 1557 into perspective

Posted by Tom Delegram, Deloitte Advisory managing director, Deloitte & Touche LLP and Karolyn Woo, Deloitte Advisory principal, Deloitte & Touche LLP on August 17, 2016

A key anti-discrimination section of the Affordable Care Act (ACA) went into full effect this summer, which has potentially significant cultural and operational shift for organizations across the healthcare payment and delivery system.

The portion of the law, Section 1557, prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in any health program or activity that receives federal financial assistance. Section 1557 also applies to any program or activity administered by an executive agency or any entity established under Title I of the ACA or its amendments.

The US Department of Health and Human Services (HHS) finalized the rule for Section 1557 in May 2016, with the rule becoming effective on July 18. For health plans, the regulation will have an impact on benefit design for the upcoming plan year. Continue reading “A closer look at a new anti-discrimination rule”

Impact of updates to the CFPB “Know Before You Owe” mortgage disclosure rule

Posted by John Graetz, Advisory principal, Deloitte & Touche LLP on August 12, 2016

The Consumer Financial Protection Bureau’s (CFPB) “Know Before You Owe” mortgage disclosure rule became effective in October 2015.  During the implementation of the rule, financial institutions encountered scenarios where the path to compliance was complex and resulted in uncertainty on the part of lenders and vendors, as well as additional costs due to revised disclosures.  On July 29, 2016, the CFPB proposed1 updates intended to formalize guidance on the rule and provide greater clarity and certainty in four key areas as follows: Continue reading “Impact of updates to the CFPB “Know Before You Owe” mortgage disclosure rule”

Marketplace transparency and reporting readiness

Posted by Irena Gecas-McCarthy, Advisory Principal, Deloitte & Touche LLP, David Wright, Advisory Managing Director, Deloitte & Touche LLP, Dmitry Gutman, Advisory Managing Director, Deloitte & Touche LLP, Dilip Krishna, Advisory Managing Director, Deloitte & Touche LLP,  Ken Lamar, Independent Senior Advisor to Deloitte & Touche LLP, Richard Rosenthal, Advisory Senior Manager, Deloitte & Touche LLP, Claudio Rodriguez, Advisory Senior Manager, Deloitte & Touche LLP, Pranav Shanghvi, Advisory Senior Manager, Deloitte & Touche LLP,  Mike Thakkar, Advisory Senior Manager, Deloitte & Touche LLP, and Alex LePore, Advisory Senior Consultant, Deloitte & Touche LLP on August 10, 2016

Introduction

Federal Reserve Board (FRB) officials have made clear in communications with the industry that they expect the foreign banking organizations (FBOs) similar to the US bank holding companies to have the capabilities to access and provide high-quality data, including credible internal reporting/MIS and regulatory reporting data from the outset.1  They point out that FBOs have had more than three years to come into compliance with enhanced prudential standards (after the initial rule proposal) and believe that effective internal MIS and regulatory reporting processes should be in place by now.  This expectation—coupled with increased transparency provided by the public disclosure of several regulatory reports—places pressure on FBOs to ensure that their end-to-end data production processes and control frameworks produce accurate and complete reporting.  There are additional regulatory reporting requirements that have been proposed and will be finalized as the industry comment periods end and the FRB processes are finalized.  These include the attestation of the FR Y-14 reports for the FBO Intermediate Holding Companies (IHC).

Building clear process and control documentation, data governance, and quality assurance processes are critical to demonstrating credible MIS and regulatory reporting implementation.  Establishing confidence in reporting will be especially critical to meeting IHC capital planning expectations related to the April 2017 Comprehensive Capital Analysis and Review (CCAR) submissions (the non-public “dry run”). The bar is high.  FBOs face reputational risk as a result of the increased transparency provided by the public disclosure of regulatory reporting filings (most notably the FR Y-9C, which will disclose IHCs’ capital ratios, balance sheet information, and financial performance, among other information, as well as public disclosure of CCAR results).

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New file layouts, test procedures call for vigilance in preparing for CMS audits

Posted by Tom Delegram, Advisory Managing Director, Deloitte & Touche LLP,  and Jack Scott, Advisory Managing Director, Deloitte & Touche LLP on August 1, 2016

Health plans that participate in the Medicare Advantage (MA) and Part D programs should already be preparing to adapt to a large number of potential changes to the data and testing protocols the Centers for Medicare and Medicaid Services (CMS) uses during its audit process. CMS released the draft 2017 audit protocols in June 2016 and the comment period for the proposed changes extends until August 12, 2016. The rules may not become final until late in the calendar year, but there are steps plans can take now that will help them prepare for the 2017 audit season. Continue reading “New file layouts, test procedures call for vigilance in preparing for CMS audits”

FRB proposes amendments to FR Y-14 reports, CFO attestation requirement for LISCC IHCs

Posted by Dmitriy Gutman, Advisory Managing Director, Deloitte & Touche LLP, Irena Gecas-McCarthy, Advisory Principal, Deloitte & Touche LLP,  Chris Spoth, Advisory Managing Director, Deloitte & Touche LLP, Ken Lamar, Independent Senior Advisor to Deloitte & Touche LLP,  and Alex LePore, Advisory Senior Consultant, Deloitte & Touche LLP on July 29, 2016

Less than a month after large foreign banking organizations (FBOs) established their intermediate holding companies (IHCs), the largest of these firms must now prepare to meet a new requirement: an attestation by their CFOs to the accuracy of their reports for capital assessments and stress testing.

On July 28, 2016, the Federal Reserve Board (FRB) published a proposal1 in the Federal Register that, among other changes, would amend the FR Y-14A/Q/M reports to apply the CFO attestation requirement to IHCs in the FRB’s Large Institution Supervision Coordinating Committee (LISCC) portfolio beginning with the reports as of December 31, 2017 and becoming fully effective with the reports as of December 31, 2018.

Earlier this year, the FRB applied this requirement to US bank holding companies (BHCs) in the LISCC portfolio, reflecting its ongoing concerns with data quality, governance, controls, and accountability over reporting.  The extension of this requirement to IHCs—which have not yet participated in the FRB’s annual Comprehensive Capital Analysis and Review (CCAR) program and related stress tests—is a further indication of increased regulatory expectations on accuracy and control environment for these data.
Continue reading “FRB proposes amendments to FR Y-14 reports, CFO attestation requirement for LISCC IHCs”