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Regulatory roadmap — putting you in the driver’s seat
Tony Hadley Experian
David Proctor Experian
#vision2014
Robert Stone Experian
2 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
What’s driving the agenda in Washington?
Data integrity
Debt collections
Ability to pay
Consumer education
Attribute governance
Model governance
Capital adequacy
Discussion topics
3 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
Our panelists
Robert Stone
Managing Consultant Director
Experian
David Proctor
VP Product Management
Experian
4 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
Regulatory priorities in the credit ecosystem
Data
accuracy
Dispute
resolution
Data
furnisher
responsibilities
Consumer
education and
empowerment
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2.2% of credit files contained a material error that would move a consumer to a different score band reflecting a higher risk
5.2% of consumers are affected by a material error, reflecting that consumers have three reports and not all reports may contain an error
21% of credit reports contained an error that did not materially affect their score
26% of credit reports were alleged to contain an inaccuracy
What’s driving CFPB’s focus on data accuracy?
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Debt collection added in July
Credit reporting complaints:
► Incorrect information on a report (73%)
► Consumer reporting agency investigation (11%)
► Inability to obtain report and score (9%)
► Improper use of credit report (4%)
► Problems with credit monitoring or identity protection services (3%)
CFPB’s consumer complaint system
39%
16%
14%
13%
8%
7%
July 2011 – February 2014
Mortgages
Other
Credit
reporting
Bank
account
Debt
collectors
Credit
cards
7 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
Consumer education occupies a large swath of CFPB’s organizational structure
General Counsel Meredith Fuchs
FOIA, Privacy and Records
Claire Stapleton
External Affairs Zixta Martinez
Response Center Scott Pluta
Operations / Facilities Suzanne Tosini
Procurement David Gragan
CIO Ashwan Vasan
CFO Stephen Agostini
Human Capital Dennis Slagter
Inclusion Scott Ishimaru
Financial Education Camille Busette
Consumer Engagement
Peter Jackson
Older Americans Nora Dowd Eisenhower
Service Members Holly Patraeus
Students Rohit Chopra
Financial Empowerment
Clifford Rosenthal Collections, Deposit
and Credit Information Markets
Corey Stone
Installment and Liquidity Lending
Markets Rick Hackett
Mortgage and Home Equity Markets Peter Carroll
Card and Prepaid Markets
Will Wade-Gery
Regulations Kathleen (Kitty) Ryan
Research Christopher Carroll
Consumer Advisory Boards
Delicia Hand
Community Affairs Chris Vaeth
Inter-Governmental Affairs
Cheryl Parker Rose
Small Business Community Banks and
Credit Unions Vacant
Legislative Affairs Catherine Galicia
Media Relations Jen Howard
Chief Technology Officer David Forrest
Chief Operating Officer Sartaj Alag
Deputy GC To-Qyuen Truong
Deputy GC Richard Lepley
Research, Markets and Regulations
David Silberman
Consumer Education and Engagement Gail Hildebrand
Principal Deputy GC
Supervision & Enforcement
Steve Antonakes
Deputy GC Steve Van Meter
Large Bank Supervision
Paul Sanford
Enforcement Kent Markus
Non-Bank Supervision Peggy Twohig
Fair Lending Patrice Ficklin
Chief of Staff
Christopher D’Angelo
Senior Advisor
Len Kennedy
Director - Richard Cordray Office of the
Director Deputy Director – Steve Antonakes
Ombudsman Wendy Kamenshine
Office of Financial Institutions and
Business Liaison Daniel Smith Office of Equal
Opportunity Employment
Stacey Bach
8 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
Priorities of the Consumer Financial Protection Bureau
Data
integrity
Consumer
education
Ability
to pay
Debt
collections
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Raising the bar on data integrity
Data
integrity
• New packaged services from Experian
• Actionable information and insight
• Data officers and custodians are empowered
• Dispute management
Raw Data On-file Data Processed
Data
Data
Disputes
Metrics, Analysis, Benchmarking and Trending
10 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
Empowering consumers and driving engagement
Consumer
education
Mandates for increased consumer transparency
and education
Going beyond a score
Live one-on-one credit report education
Customer
education
Customer
loyalty
Credit
building
Credit
events
11 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
Assessing ability to pay with modeled income
Ability
to pay
The role of modeled income
The impact of modeled income on credit line increase
Regulatory update
Best practice: underwrite first, then apply ATP check
12 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
Debt collections in the regulatory spotlight
Debt
collections
Drivers include federal law and regulator priority
You need superior data quality…
Filters…
Single search and streamlined solution
Scoring Skip
tracing FirstSweepSM
13 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
Priorities of the Consumer Financial Protection Bureau
Debt
collections
Drivers include federal law and regulator priority
You need superior data quality…
Filters…
Single search and streamlined solution
Ability
to pay
The role of modeled income
The impact of modeled income on credit line increase
Regulatory update
Consumer
education
Mandates for increased consumer transparency and education
Going beyond a score
Live one-on-one credit education
Data
integrity
New packaged services from Experian
Actionable information and insight
Data officers and custodians are empowered
Dispute management
14 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
Priorities of prudential regulators
Model
governance
Capital
adequacy
Attribute
governance
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Monitors attributes for soundness over time
Tracks the impact of changes on existing attributes
Provides regulatory audit support
All of which includes:
► Framework for effective attribute development and use
► Documentation management for robust version tracking
Attribute governance
Attribute governance is necessary for compliance
16 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
OCC Bulletin 2000-16
2000
OCC Bulletin 2011-12
2011
.
The Supervisory Guidance on Model Risk Management OCC Bulletin 2011–12 extends the scope beyond model validation to policies, practices, standards for:
► Model development
► Model use and implementation
► Model governance and controls
All banks of all sizes are impacted
Model governance
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Attribute and model governance
DISCOVERY
Risk exposures,
business activities and
complexity and use of
models
GAP ANALYSIS
Gap analysis of model
policies and procedures and
identify discrepancies to
meet effectiveness and/or
compliance
ACTION PLAN
With detailed
recommendations and
migration path with timing
for bridging the gaps
Business Review
CREATION
Definitions; logic
and code
accuracy; and
implementation
timelines are
reduced
MONITORING &
MAINTENANCE
Detects shifts for
potential impact
and facilitates
upgrades to newer
versions of
attributes
DOCUMENTATION
Ensures accurate
information in all
applications
Records general
conventions &
limitations
MODEL
VALIDATION
Validation,
Backtesting,
Benchmarking/
effective challenge,
Sensitivity Analysis
and Stress Testing
Attributes Models
18 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
Experian offers unparalleled experience
and strategic thinking to help you deliver on
stress scenario loss forecasting models to
ensure capital adequacy
Primary business requirements:
► CCAR/DFAST
► Basel
► ALLL
Areas of expertise / previous engagements:
► Analytics and modeling
► Strategic business consulting
► Staff augmentation
Capital adequacy
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