Question: Our holding company is preparing to do training on the revised requirements under UCC 9. I was going to sign up my department for this training (we are the bank's compliance area - 4 of us); however, the senior loan administration officer told me that this wouldn't apply to us since the issue is dealing with the perfection of collateral and typically not "compliance". Our function is mainly consumer compliance (deposits and loans) and we typically do not address collateral issues.
In your opinion, do you think there could be issues that we might need to be aware of from a "compliance" standpoint?
Answer: In my view, the realm of "compliance" includes compliance with a whole host of laws and regulations. I could make arguments both for and against having compliance personnel trained in Article 9.
While it's true that Article 9 deals with perfection of security interests, if the bank does not properly comply with it, the bank's security interest in collateral could be jeopardized and the bank could find itself unsecured. Seems to me that ensuring proper compliance in this area, which is changing drastically, is critically important.
However, if you traditionally do not get involved in reviewing compliance on collateral filings, then the Article 9 training wouldn't be necessary for you unless you intend to expand the scope of what you have traditionally focused on to include security interest perfection.
I do think that it is a good idea to have extra scrutiny (in the form of trained people) looking at loan files after July 1, to make sure that security interests are being properly perfected under the new revisions. Whether that extra scrutiny is applied by someone in the compliance area, audit area, or a loan supervisor, is something the bank will need to work out.
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