and re

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

20. Determine whether results of periodic reviews are formally communicated to senior managers independent of the sales function, and whether a followup system tracks management responses 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

Section 413.3

a. Review responses under the Third
Party Vendor section of the ICQ
and the text of the bank's over-
sight 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 re-
sponse 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, includ-
ing those in the Interagency
Statement.

- How bank management assures itself that third party vendors

comply with the terms of the agreement.

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 management 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.

Program Management

1. Has the bank's board of directors adopted a program management statement that addresses:

The features of the sales program? • The associated risks?

• The roles of bank employees?
• The roles of third party entities?

2. Do the bank's policies address the following issues:

• Program objectives?

• Strategies to be employed to achieve objectives?

• Supervision of personnel involved in nondeposit investment sales programs?

• Supervisory responsibilities of third party vendors who are selling on bank premises?

• Selection of the products the bank will sell?

• Permissible uses of bank customer information?

Communications with customers?
The setting and circumstances of
nondeposit product sales?

• Disclosures and advertising?
• Suitability of recommendations?
Employee qualifications and train-
ing?

• Employee compensation systems?
• A compliance program?

3. Do written supervisory procedures assign a manager the responsibility for:

• Reviewing and authorizing each
sale?

• Accepting each new account?
• Reviewing and authorizing all sales-
or account-related correspondence
with customers?

• Reviewing and authorizing all ad-
vertising and promotional materials
prior to use?

4. Does the bank use written job descriptions to assign management responsibilities?

Section 413.4

5. Do policies and procedures for personnel who are not directly involved in nondeposit investment product sales detail what the employees may say and not say about investment products?

Product Selection

6. Does the bank select the products to be offered?

7. If so, does the selection process make use of predetermined criteria that consider the customers' needs?

8. Does a qualified committee or an analyst who is independent of the sales function make the product selections?

9. If the bank uses outside consultants to help select products, does bank management determine if the consultant receives compensation from product issuers or wholesalers?

10. If the product selection analysis is performed by another party, such as a clearing broker or third party vendor, does bank management understand and agree with the analysis method?

11. Does the bank conduct continuing reviews of product offerings to assure that they remain acceptable and are such reviews done at least annually? 12. Does bank management consider, as part of the selection process, the product issuer's contingency plans for dealing with unusual surges in redemptions?

13. Are these contingency plans based on various market scenarios?

14. Do the contingency plans include: • Emergency staffing?

• Additional communications capabil

ities?

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

1

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 of-
fered?

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?

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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