Urban Trust Bank of Lake Mary, Fla., has entered an agreement with the Office of the Comptroller of the Currency (OCC) to improve its loan portfolio management and its oversight of its partners –in large part due to its relationship with payday lender CheckSmart, a division of Community Choice Financial Inc., of Dublin Ohio.
While the OCC didn’t order Urban Trust to sever its relationship with CheckSmart, the regulator did put the bank on a tighter leash.
Under the agreement, Urban Trust must analyze the risks its Insight prepaid cards pose to the safety and soundness of the bank, create a business plan for new and existing products and ensure those products don’t violate consumer laws. The bank has to present its analysis to the OCC in a series of reports over the next few months.
The agreement is an example of how the OCC is applying the guidance that it released last year in regards to third-party relationships. The instructions regarding risk assessments, due diligence, and on-going oversight come straight from the guidance. It is important to note that the OCC also found other issues in its examination, including weakness regarding suspicious activity reports and consumer protection issues in regards to the Flood Disaster Protection Act. So this should not viewed simply as a prepaid for payday lending action alone.
Read more at: http://www.cleveland.com/consumeraffairs/index.ssf/2012/09/occ_smacks_bank_for_issuing_pr.html
Read the order at: http://www.occ.gov/static/enforcement-actions/ea2012-190.pdf
Read a letter from consumer groups about the relationship at: http://www.nclc.org/images/pdf/high_cost_small_loans/letter-checksmart-occ.pdf
Read the OCC’s response at: http://www.nclc.org/images/pdf/high_cost_small_loans/letter-occ-check-smart-urban-trust-bank.pdf
Read the guidance on third-party relationships at: http://www.occ.gov/news-issuances/bulletins/2001/bulletin-2001-47.html
