On November 28, 2016, the Consumer Financial Protection Bureau announced that it issued a compliance bulletin warning regulated financial companies about the use of employee incentive programs in providing their financial products to consumers. The Bureau advised that these types of programs, if run unchecked or with excessive sales goals, can lead to employees engaging in illegal activity, such as opening accounts without authorization, opting-in consumers for overdraft protection without authorization, and deceptive sales tactics. Noted incentive programs include linking sales to bonuses and compensation or continued employment. The bulletin includes guidance for compliance management systems (CMSs) that can be implemented by financial institutions in order to avoid violations of consumer protection laws stemming from these incentives programs. Recommended policies include fostering a culture of consumer service in the top management and board of directors, implementing reasonably attainable sales targets, maintaining independent reporting systems, enhancing training on the products being sold and on ethical behavior, and creating monitoring systems that follow key metrics that may be indicative of improper behavior.
This compliance bulletin comes in the wake of the Bureau recently assessing the largest fine in its history against a national bank for allegedly opening unauthorized deposit and credit card accounts on behalf of consumers in order to obtain financial compensation for meeting sales targets, which Enforcement Watch covered here.