Managing Examiners
When examiners make up answers or recommend something made up out of whole cloth, there is a problem and the problem sits in your lap. It involves additions to compliance programs that aren't requirements. All they do is make your job harder.
What should you do when this happens? First, keep in mind that the examiner's job is not an easy one. There is a lot to learn before an examiner really becomes an expert able to apply regulatory knowledge to specific and different banking situations. How, after all, is an examiner supposed to know everything instantly when that huge briefcase is handed to her, when you are still struggling to learn what you need to know to get the compliance job done? So have some sympathy. Do everything you can to keep the working relationship cooperative and constructive.
Second, don't let any examiner push you around. You are responsible for developing and managing the best compliance program for your institution. One of your responsibilities as a compliance manager is to keep the wolf from the door. Sometimes the wolf is an inexperienced examiner with authority issues. This takes careful handling.
One rule of thumb is to avoid confrontation whenever possible. If it isn't possible, your only actual remedy may be an appeal. But when possible, keep the situation constructive. The best way to do this is to keep the relationship cooperative. Think of you and the examiner as a member of your team.
For example, when an examiner has a suggestion that you think is out of the blue, don't scorn or laugh. Instead (no matter what you are thinking inside) say something like, "that's an interesting approach. Do other banks do that? How effective do you think it is."
This type of approach gets the examiner discussing whether it works rather than whether it is a requirement. You can save that debate for later. Just sort of insert sideways a question or a reference to what the suggestion is intended to accomplish.
When the working relationship is constructive, it is much easier to discuss the need or regulatory mandate for a recommendation. You can also get at why the examiner is making the suggestion.
For example, if the examiner suggests that you should revise your policy to include a specific element that you don't think is required by the pertinent regulation, start your discussion with the "that's interesting" approach. As you discuss the objective of the examiner's recommendation, you should also try to find what the examiner considers a weakness that needs to be addressed.
With the current exam approach of evaluating the program and looking at the institution from the top down, examiners have a difficult job. They are dealing with concepts and intangibles instead of numeric analyses. Many examiners are not yet comfortable with this and feel obligated to recommend something that they can point to. The better the examiner's understanding of the institution and its processes, the more realistic the recommendations will be.
Copyright © 2005 Compliance Action. Originally appeared in Compliance Action, Vol. 10, No. 6, 5/05
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