November 19, 2013 –
New guidelines for banks that employ independent consultants

Last week, the Office of the Comptroller of the Currency provided guidance and standards for when it requires national banks, federal savings associations, or federal branches or agencies (collectively, “Banks”) to employ independent consultants as part of an enforcement action to address significant violations of law, fraud or harm to consumers.

Specifically, OCC Bulletin 2013-33 describes the OCC’s:

• assessment of the need to require a Bank to hire an independent consultant in an enforcement action.
• expectations for a Bank’s due diligence process when retaining an independent consultant. A Bank’s due diligence should establish that the consultant has sufficient independence, capacity, resources and expertise and that the engagement contracts and work plans adequately address the OCC’s supervisory concerns.
• review of the qualifications of the proposed consultant and the proposed contractual terms of the engagement.
• oversight of the performance of the consultant.

Importantly, the bulletin applies to any Bank subject to an enforcement action in which the OCC requires the Bank to hire an independent consultant to address significant violations of law, fraud or harm to consumers. It does not apply when the OCC requires the Bank to hire a consultant to provide expertise needed to correct operational or management deficiencies. These types of “functional” engagements, noted the OCC, have been particularly valuable for community banks and do not raise the same level of concerns addressed in the bulletin.

An independent consultant can play a valuable role in assisting a Bank’s management and board of directors in correcting significant violations of law, fraud or harm to consumers. However, in engaging such a consultant, Banks must now comply with the OCC’s new ground rules.

Read the bulletin: OCC 2013-33: Use and review of independent consultants in enforcement actions (Office of the Comptroller of the Currency, 11/12/13)

For more information regarding the bulletin or the requirements for Banks with respect to relationships with third parties in general, please contact Andy Fernandez, Gabriel Caballero or Stephanie Quinones, attorneys in Gunster’s banking and financial services practice.

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