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UDAAP controls for managing risk

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  • Boccia, Barbara

Abstract

Compliance with unfair, deceptive or abusive acts or practices (UDAAP) principles is a complicated matter for most financial institutions (FIs), large or small. In the USA, UDAAP regulations are broadly defined and fairly subjective in interpretation, especially when applied by regulators with the benefit of hindsight. An allegation of ‘unfair’, ‘deceptive’ or ‘abusive’ can arise in any aspect of the FI’s retail footprint, from the initial development and marketing of products and services, through to management of complaints and servicing. The increased complexity of financial products and services, along with a myriad of communication and delivery methods, has made the compliance task more daunting in terms of preventing UDAAPs from occurring. This paper is intended to help identify potential UDAAP risks and provide practical guidance for mitigating those risks with strong controls as part of a comprehensive compliance management system (CMS).

Suggested Citation

  • Boccia, Barbara, 2019. "UDAAP controls for managing risk," Journal of Financial Compliance, Henry Stewart Publications, vol. 2(3), pages 271-283, March.
    • Handle: RePEc:aza:jfc000:y:2019:v:2:i:3:p:271-283
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    More about this item

    Keywords

    UDAP; UDAAP; unfair; abusive; deceptive (practices); compliance management system (CMS); risk assessment;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • K2 - Law and Economics - - Regulation and Business Law

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