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Section 413.3

a. Review responses under the Third Party Vendor section of the ICQ and the text of the bank's oversight program.

b. Review the scope and frequency of completed and scheduled oversight reviews and reviews of customer complaints and their resolution. c. Review bank management's response to recommendations made during past examinations.

d. Review the third party vendor agreement and determine: -Whether it specifies that such

entities will comply with all applicable requirements, including those in the Interagency Statement.

How bank management assures itself that third party vendors comply with the terms of the agreement.

Retail Nondeposit Investment Sales
Examination Procedures

views of the ongoing prudence of
the investment. Such reviews

should cover:

The quality of the holdings,
The compatibility of investment
objectives, and
-The availability of competing in-
vestments, including non-propri-
etary products, which might
better meet the fiduciary ac-
count's investment objectives.

Compliance Program

19. Determine how effective the bank's
compliance program is by reviewing:
Responses to the Compliance Pro-
gram section of the Ica,

The independence of compliance
personnel,

• Training provided to compliance
personnel,

• Automated exception reporting
systems, and

•The scope, frequency, and findings
of compliance reviews, and re-
sponses to findings.

20. Determine whether results of periodic
reviews are formally communicated to
senior managers independent of the
sales function, and whether a follow-
up system tracks management re-
sponses to noted exceptions.

21. If prior examination findings, compliance reports, a pattern of customer complaints, or routine oversight by bank management identifies the possibility that suitability problems may exist, determine if bank management has conducted a thorough review of all affected accounts and instituted appropriate corrective actions.

Third Party Vendors

22. Determine the effectiveness of the
bank's oversight program and whether
bank management has discharged its
responsibilities under the program.

Comptroller's Handbook for National Bank Examiners
Temporary Insert - February 1994

e. Review how bank management
determined the adequacy of the
steps a third party vendor takes to
avoid customer confusion about
the nature of the product and the
bank's role in the sales process.
f. Determine whether bank manage-
ment understands and agrees with
the way the third party vendor
selects products.

23. After making a judgment about the
effectiveness of the oversight of third
party vendor sales, complete any
other examination procedures that
appear appropriate.

Summary

24. Determine if bank management has demonstrated by its actions whether it believes customers' interests are critical to all aspects of its nondeposit investment product sales programs.

25. Discuss significant findings with the EIC and bank management and prepare written comments.

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Retail Nondeposit Investment Sales Internal Control Questionnaire

• Enhanced operational support?

15. Does the analysis of fixed and variable rate annuities include a determination of the credit quality of the issuing insurance company?

16. Does the analysis of fixed and variable rate annuities include determining whether the issuing insurance company can sell or simply transfer the annuity contract to another insurance company?

Use of Customer Information

17. Do written policies concerning the use of information about bank customers address:

• The minimum standards or criteria for identifying a customer for solicitation?

Acceptable calling times?

• The number of times a customer may be called?

The steps to be taken to avoid confusing depositors about the nature of the products being offered?

Setting and Circumstances of Nondeposit Sales

18. Has a bank officer been assigned responsibility for reviewing all current and planned nondeposit investment sales locations to determine whether appropriate measures are in place to minimize customer confusion?

19. Are nondeposit investment products sold only at locations distinct from where deposits are accepted?

20. Are sales locations distinguished by use of:

Separate desks?

• Distinguishing partitions, railings, or planters?

• Signs?

21. If personnel both accept deposits and

Comptroller's Handbook for National Bank Examiners Temporary Insert — February 1994

Section 413.4

sell nondeposit investment products, do operating procedures address safeguards to prevent possible customer confusion?

22. Are the people who sell nondeposit investment products distinguished from people who accept deposits by such means as:

• Name tags or badges?
Business cards?

23. Do operating procedures prohibit tellers from offering investment advice, making sales recommendations, or discussing the merits of any nondeposit investment product with customers?

24. Does the bank offer nondeposit investment products with product names that are not.

Identical to the bank's name? • Similar to a deposit product?

(Example: XYZ Money Market Fund vs. XYZ Money Market Account.)

25. Does the bank avoid using the words "insured," "bank," or "national" in product names?

Disclosures and Advertising

26. Has bank management designated an officer to be responsible for ensuring that bank-prepared investment advertise.nents and advertisements prepared by any other party are accurate and include all required disclosures?

27. Is a signed statement acknowledging

disclosures obtained from each customer at the time that a retail nondeposit investment account is opened?

28. For accounts established prior to the issuance of the Interagency Statement, are procedures in place to ensure that such a signed statement is obtained prior to, or at the time of, the next transaction?

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