Iowa Banking Law Blog
CFPB to hold supervised banks and non-banks responsible for service provider violations
Apr. 24, 2012 – Janet E. Phipps Burkhead, Iowa Banking Law Blog
On April 13, 2012, the Consumer Financial Protection Bureau (“CFPB”) issued a bulletin advising of its expectations for oversight of business relationships with service providers, as defined in Section 1002(26) of the Dodd-Frank Act. Banks and non-banks often hire service providers to handle customer service issues, operate call centers, handle data, and process credit cards. The CFPB advised that it expects banks and non-banks to “have an effective process for managing the risks of service provider relationships.” The following steps were advised:
Any agreements with a service provider should be carefully reviewed to ensure that banks and non-banks can hold the service provider accountable for its non-compliance, as well as to indemnify the bank or non-bank for the service provider’s misdeeds.
Tags: bank service providers, banking regulatory compliance, CFPB, Consumer Financial Protection Bureau, Dodd-Frank Act
Industry Categories: Banks & Financial Institutions