Revised mitigating factors, and increased scoring weight of those factors, are two key changes in the manual for assessing civil money penalties (CMPs), the regulator of national banks said Tuesday.
The Office of the Comptroller of the Currency (OCC) said that the changes to its Policies and Procedures Manual (PPM) for CMPs were the first major changes made in more than four years. The revised manual takes effect Jan. 1.
According to a bulletin issued by OCC (no. 2022-24), the revised mitigating factors address self-identification, remediation or corrective action and restitution. The new PPM also adds examiner guidance related to “factoring unquantifiable public harm (including redlining cases) and the use of business restrictions or other injunctive relief in conjunction with a CMP,” the agency said.
The changes were made, the bulletin states, because previous mitigating factors outlined in 2018 “did not give banks a sufficiently strong incentive to fully address underlying deficiencies.”
On mitigating factors, more specifically, the bulletin notes that “self-dentification” will be considered to the extent to which the bank “self-identified and disclosed fully and in a timely manner the conduct or deficiencies underlying the violations of law or unsafe or unsound practices at issue to the OCC.”
Under “remediation,” the bulletin explains that examiners will, in assessing this factor, consider the extent to which the “bank timely and effectively implements remediation (corrective action).” Timeliness should be evaluated in relation to when the bank first had notification of the conduct or deficiency, as notification is defined under “Continuation after notification,” the bulletin states.
“The OCC first implemented a CMP matrix for institutions via the similarly titled CMP PPM dated February 26, 2016,” the bulletin stated. “Since then, the agency has found that the suggested action table accompanying the matrix did not allow for sufficient differentiation among varying levels of misconduct or by institution size.”