A bank's president would like to begin offering a new home equity line of credit product within two weeks. In all cases the borrower's principal dwelling will secure the loan. The president has already launched a planned advertising campaign for the bank's major service markets. What should the compliance professional do
FIRST?
The first action a compliance professional should take when a new home equity line of credit product is introduced is to perform a risk assessment. This is essential to identify any potential compliance and regulatory risks that could affect the bank. A thorough risk assessment will inform subsequent steps, such as the development of appropriate legal documents, disclosures, and staff training, ensuring that the product is compliant with relevant laws and regulations and protecting the bank from legal, financial, and reputational risks.
D, page 16.
For the compliance professional facing the situation of a new home equity line of credit product being launched imminently, the first step should prioritize identifying potential compliance and regulatory risks associated with offering the new product. This proactive approach is crucial for ensuring that the product aligns with relevant laws and regulations, thus safeguarding the bank against potential legal, financial, and reputational damages. Option D, "Perform a risk assessment to determine the bank's level of risk in offering this new product," is the correct first action. A risk assessment will help identify compliance issues, regulatory requirements, and any other potential risks associated with the new product. Understanding these risks is foundational for guiding the development of legal documents, disclosures, and training programs. It also positions the compliance professional to advise the bank's leadership effectively on how to mitigate these risks.