Download 5n. Unfair or Deceptive Acts or Practices Internal Audit Checklist

5n. Unfair or Deceptive Acts or Practices Internal Audit Checklist
Completed by:
Functional Area:
Date Completed:
W/P Ref:
Question
A. Compliance Management Programs
1.
Has the trust department developed policies and procedures including guidance on
preventing unfair or deceptive acts or practices (UDAP)?
2.
Does the trust department review its practices, policies and decisions considering
unfair or deceptive acts or practices?
3.
Does the trust department’s compliance or risk management function determine if
the identification of individual violations is symptomatic of a larger problem
(possible pattern of unfair or deceptive practices)?
4.
Do the trust department employees (including new business representatives, account
administrators and investment personnel and receive training on the provisions of
UDAP?
5.
Does the trust department review client complaints to identify potential compliance
problems and negative trends that have the potential to be unfair or deceptive?
6.
Does the trust department consider, in its review of client complaints, if numerous
complaints about the same product or service may be a symptom of potential areas
of UDAP concern?
7.
Did the trust department make changes to prevent recurrence in advertising and
marketing materials if they determined that potentially unfair or deceptive acts or
practices exist?
8.
Does the trust department clearly disclose a telephone number or mailing address
(and email address or website location) that clients may use to contact the trust
department or its third-party servicers regarding any complaints or inquiries they
may have?
B. Advertising and Marketing Materials
1.
Does the trust department review all advertisements, promotional materials and
marketing scripts to ensure that there is a reasonable factual basis for all
representations made?
2.
Does the trust department review all advertisements, promotional materials,
marketing scripts and marketing presentations to ensure that these materials do not
use fine print, separate statements, or inconspicuous disclosures to correct
potentially misleading information?
3.
Does the trust department tailor advertisements, promotional materials, marketing
scripts and presentations evaluating the sophistication and experience of the target
audience, including the elderly and financially unsophisticated individual?
Yes/No
Comments
4.
Does the trust department in its advertisements, promotional materials, marketing
scripts, and recorded telephone conversations, determine whether the bank (or its
third party servicer) makes claims, representations or statements that may mislead
members of the target audience about the performance, cost, value, availability,
benefits, or terms of the product or service?
5.
Does the trust department review all advertisements, promotional materials, and
marketing scripts to ensure that they fairly and adequately describe the terms,
benefits, and material limitations of the product or service being offered, including
any related or optional trust products or services, and that they do not misrepresent
such terms either affirmatively or by omission?
6.
Does the trust department avoid advertising that a particular service or benefit will
be provided in connection with an account if the bank does not intend or is not able
to provide the service or benefit to accountholders?
7.
Does the trust department draw the attention of customers to key terms and
definitions, including limitations and conditions that are important in enabling
customers to make informed decisions about whether the product or service meets
their needs?
8.
Does the trust department ensure that costs and benefits of related or optional
products and services are clearly explained and not misrepresented or presented in
an incomplete or overly complex manner?
9.
Does the trust department avoid using advertising terms that are not available to
most customers, and avoid using unrepresentative examples in advertising,
marketing, and promotional materials?
10. Does the trust department review its website content and navigational process to
ensure that the customer is able to readily obtain the necessary disclosures for its
products?
11. Does the trust department review its advertising and promotional materials to avoid
raising UDAP concerns?
12. Is the employee in charge of the review, knowledgeable in UDAP requirements and
guidelines and have a sound knowledge of the complexities of trust products and
services offered?
C. Evaluating Initial and Subsequent Disclosures
1.
Does the trust department review all standardized customer agreements and
disclosures to ensure that there is a reasonable factual basis for all representations
made?
2.
Does the trust department review all standardized agreements to ensure they are
fairly and adequately describe the terms, benefits, and material limitations or
conditions of the product or service being offered? Limitations may include such
things as: a special interest rate that applies only to balance transfers; an expiration
date for terms that apply only during an introductory period; or a prerequisite for
obtaining particular terms (such as minimum transaction amounts, introductory or
other fees, or other qualifications). Conditions may include the ability to cancel
without charge a service that was offered on a free trial basis?
3.
Does the trust department inform customers in a clear and timely manner about any
fees, penalties, or other charges (including charges for any force-placed products)
that have been imposed, and the reasons for their imposition?
4.
Does the trust department reserve the right to change the terms of a service or
product?
5.
If so, do the trust department’s customer agreements clearly disclose that the bank
can make future changes to the rate, terms, and conditions otherwise specified, in
any agreement signed by or given to the consumer?
6.
Are such changes clearly explained?
E. Monitoring the Conduct of Employees and Third Parties
1.
Does the trust department have effective risk and monitoring controls for selecting
and managing third-party contractors?
2.
Do such agreements and policies outline the degree of monitoring, acceptable error
rates, and corrective action provisions for noncompliance?
3.
Do such agreements also identify issues that would need to be escalated to trust
department management?
4.
Do the trust department’s compensation programs for employees and third-party
contractors provide incentives for acts or practices that could raise potential
concerns, such as compensation programs that steer consumers to particular
products to the exclusion of other, potentially beneficial products?
5.
Does the trust department monitor the training of employees and third parties who
market or promote trust department products or services to ensure that they are
adequately trained to avoid making statements or taking actions that might be unfair
or deceptive?
6.
Does monitoring include a review of training and promotional materials, including
financial and educational seminar information?
7.
Does the trust department review the third party’s primary interface with clients,
such as reviewing recorded telephone calls or transcripts of online communication?