A bank's president would like to begin offering a new home equity line of credit product within two weeks. In all cases the borrower's principal dwelling will secure the loan. The president has already launched a planned advertising campaign for the bank's major service markets. What should the compliance professional do
FIRST?
Click on the arrows to vote for the correct answer
A. B. C. D.D
In this scenario, the bank's president has decided to offer a new home equity line of credit product within two weeks, and the compliance professional must decide what to do first. The compliance professional's primary responsibility is to ensure that the bank complies with all applicable laws and regulations.
Option A, hiring an attorney to write the appropriate legal documents and disclosures, is a good step to take, but it may not be the first thing to do. Before drafting legal documents, the compliance professional should first understand the compliance risks involved in offering this new product.
Option B, writing a memo to the president explaining why the compliance professional should have been involved earlier, may be necessary at some point, but it does not address the immediate issue of launching the new product within two weeks.
Option C, beginning training sessions for the lending and loan operations staff on the compliance issues involved, is a good step to take, but again, it may not be the first thing to do. Before training staff, the compliance professional should first assess the compliance risks involved in offering the new product.
Therefore, the best option is D, performing a risk assessment to determine the bank's level of risk in offering this new product. The risk assessment will help the compliance professional identify the specific compliance risks associated with the new product and determine the appropriate controls to mitigate those risks. This will also help ensure that the bank is prepared to comply with all applicable laws and regulations before launching the new product.
In summary, the compliance professional should perform a risk assessment to determine the bank's level of risk in offering the new product, before taking any other action.