An examiner preparing for an RNDIP program examination should consider including the following information requests in the Request Letter. As detailed below, the sample information requests are divided into short and long sample Request Letters. These
information requests should be tailored to match the scope of the examination and the bank’s specific sales program.
Bank Information Request (Short Form)
Brokerage services oversight committee minutes and reports
A program management statement (may be incorporated in other board directives)
Strategic plans and budgets for the area
Financials pertaining to the business
Policies and procedures
Risk management reports used to monitor the business (could include compliance or audit reports and, mystery shopping findings)
The written agreement between bank and broker
The bank’s product selection criteria
Sales production reports
The bank employee referral fee/incentive compensation program
Bank employee associated training
Consumer complaint, litigation, and settlement information
Bank exception reports
Bank advertisements and promotions (including the bank’s Web site)
Securities regulators’ reports, if available
Insurance regulators’ reports, if available (that cover fixed rate annuities) Bank Information Request (Long Form)
1. Bank Management Oversight
a. Current organizational charts for business, compliance, risk, and other control functions. Indicate whether key management personnel are bank or broker-dealer employees.
b. Professional backgrounds of key personnel (e.g., education, certifications, years in industry, and years with the bank).
c. Outline the committee structure for all committees with oversight over the bank’s RNDIP sales program. Provide committee charters, minutes, and meeting packages of primary committees since DATE.
d. Copies of presentations, including meeting packages, to the board of directors or any committees of the board and to executive bank management made during YEAR.
e. Summary of regulatory reviews (DATE RANGE) of securities brokerage, insurance agency, and RIA activities that service the bank.
f. Complete SSAE 16 report for the broker-dealer, insurance agency, and RIA third parties, if applicable.
2. Policies and Procedures
a. Current program statement covering the bank’s RNDIP sales program.
b. Documentation indicating the board’s most recent review and approval of the program statement.
c. All policies and procedures relevant to the sales program.
3. Strategic Plan and Financials
a. Year-end DATE financial statements with comparison to budget.
b. Sales volume and revenue reports by product and branch.
c. Strategic plan.
4. Third-Party Risk Management of Broker-Dealers, Insurance Agents, and RIAs used in the RNDIP Sales Program
a. Description of the initial and ongoing third party due diligence process.
b. Written agreements between the bank and affiliated or unaffiliated third parties.
c. The most recent MIS the third party provides bank management.
d. Documentation to establish compliance with affiliate transaction requirements, if a bank affiliate is used in the sales program.
5. Staffing
a. List of RNDIP bank branch offices and locations.
b. RNDIP supervisory structure. For each level within the structure, provide the number of associates, required industry designations and respective authorizations, product limitations, and whether the individual is a bank or broker-dealer employee.
c. Describe the roles and responsibilities of personnel authorized to sell nondeposit investment products, including annuities and insurance products.
d. Describe how oversight over dual employees’ activities is conducted.
e. Provide compensation plans for bank employees involved in brokerage activities.
Include unlicensed bankers, referral fee programs, and incentive programs.
f. Description of bank sales campaigns or contests for brokerage referrals and business.
g. Describe the training program in place, including key compliance elements and ad-hoc training for personnel engaged in the sale of investments and client referral activities.
6. Compliance and Risk Management Functions and Oversight
a. YEAR compliance plan and scope of compliance activities. Provide an overview of the YEAR compliance testing performed and the reports to management.
b. Listing of all compliance oversight reports currently generated with a description of what the report identifies.
c. Description of the risk assessment process used to oversee sales practices.
d. Identification of bank officers and committees directly involved in supervising and monitoring sales practices.
e. Exception and surveillance reports used by bank management to monitor the sales program. Provide a sample of the reports.
f. Risk management reports and business line risk control self-assessments.
g. Description of the process used by compliance to monitor and test suitability.
h. Description of the process used by the risk management function to monitor the RNDIP sales program. Provide reports used by risk management to monitor the sales program.
i. Description of the retail branch testing program. Provide summary reports indicating the scope of the review and findings. Provide any MIS reports that identify trends across OSJ and branch exams conducted. Include coverage of bank branches for testing of bank requirements.
j. Description of the process used to generate and review client disclosures and
marketing materials. Describe the role of compliance and legal in the review process.
7. Client Complaints, Litigation, and Settlements
a. Description of the process used to handle, address, escalate, and monitor customer complaints. Provide recent bank management reports.
b. List of pending litigation and settlements. Provide a listing of settlements from DATE to present with a brief description of the cause for the litigation or arbitration.
c. Reports that analyze client complaints, litigation, and settlements with identification of any trends and management’s responses to issues.
8. Bank Products and Services
a. List of investment and insurance products and services offered.
b. Description of investment programs, account types, and associated fees.
c. Identification of new products and services added since DATE.
d. Identification of the products and services removed from the RNDIP platform since DATE.
e. Description of the new product approval process, including the related governance, product selection criteria, product fee assessments, and investor constraints.
f. Description of the ongoing due diligence process in monitoring retention or removal of RNDIPs.
9. Client Disclosures, Account Information Materials, and Promotional Materials a. Customer disclosures required by the bank, including but not limited to consumer
protection, proprietary products, affiliate relationships, and privacy.
b. Current disclosures and marketing materials (e.g. account agreements, customer profiling tools, customer acknowledgment, switching and 1035 exchange letters, structured products, alternative investments, breakpoints, etc.).
c. Description of how client disclosures and marketing materials are reviewed and generated.
d. Description of the role of compliance and legal in the review process.
e. Description of the process used to remove outdated or incorrect client disclosures, client information documents, and marketing materials.
f. Advertising and promotional materials used on bank premises or on behalf of the bank.
10. Internal Audit Function
a. The internal audit plan that covers the bank’s RNDIP sales program.
b. Copies of the internal audit reports for the RNDIP sales program for DATES and related action plans.
11. GLBA and Regulation R Compliance
a. List and details on the GLBA statutory exceptions or Regulation R exemptions that the bank utilizes in its RNDIP sales program.
b. Networking
i. networking agreements with registered brokers that offer brokerage services either on or off bank premises.
ii. incentive and compensation plans as they relate to the performance of securities transactions and activities for bank employees.
iii. referral plans for referrals by bank employees to the broker-dealer.
iv. advertising and promotional materials used by the bank during (specific time frame) to inform customers about the brokerage products and services.
v. associated disclosures provided to customers.
c. Sweep Services and Money Market Fund Transactions
i. Description of the sweep services provided by the business line.
ii. List of the GLBA statutory exceptions or Regulation R exemptions that the bank utilizes.
iii. List of the money market funds available and prospectuses. Discuss the fees charged to the customer, the nature of the fees, and how service or maintenance fees are assessed.
iv. Description of the nature of money market fund transactions conducted on behalf of customers or other banks.
d. Risk and Control
i. Changes to the bank’s regulatory risk assessment as it relates to the GLBA and Regulation R. Identify the individuals and areas responsible for changes.
ii. Changes to the regulatory risk assessment testing modules as it relates to the GLBA and Regulation R and the frequency of performing these tests.
e. Compliance
i. The compliance plan. Discuss changes to compliance systems to ensure compliance with the GLBA and Regulation R.
ii. Description of the record keeping systems used to demonstrate compliance with the GLBA/Regulation R.
iii. Description of how changes to current processes as a result of the GLBA and Regulation R are communicated to employees. Provide training decks or internal communication memos.
f. Internal Audit
i. The internal audit program that audits the bank’s compliance with the GLBA and Regulation R.
ii. Description of the scope and depth of internal audit coverage of GLBA and Regulation R compliance.