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Due Diligence

How Do You Know If a Vendor Is FFIEC Examined?

Jun 19, 2018 by Branan Cooper

The Federal Financial Institutions Examination Council (FFIEC) and the Consumer Financial Protection Bureau (CFPB) both have broad regulatory authority over third party service providers. In fact, over the past few years, we've seen the FFIEC issue stringent and specific, but very helpful, updated guidance and through enforcement actions and other pronouncements related to direct supervision of service providers, the CFPB has asserted updated authority as well.

In the public domain, there is no easy "one stop shop" to see which vendors you're using are being examined by the FFIEC or if they have been the subject of a prior FFIEC exam. That is unless, of course, it went very, very badly and ended with some sort of publicly released enforcement action.

The best way to discern if they have been examined by the FFIEC is to simply ask the vendor or, to get at it a different way, require them to disclose the results of any external audits, though that can prove quite tricky as they are likely to push back on that requirement.

For those of you who work at a financial institution, there is another way. You can simply directly request from your regional prudential regulator's office any audits or reports of examination that have been supplied to them on your vendors.

Keep in Mind When Requesting From The Regulator’s Office

  • It's not even going to be close to full coverage of all your vendors, more likely just a select handful. Probably just the major processors.
  • If you ask only about a certain subset of your vendors, you may inadvertently be begging the question of, "Why did you ask for only certain vendors of a certain type and not all?" – which you should be prepared to answer. That shows you aren’t reviewing in an inconsistent manner.

If your vendor has been examined by the FFIEC, you can take some assurance that it’s a thorough exam based on their comprehensive playbook in the form of the FFIEC IT Examination guide. Most people in the financial institutions segment are more concerned by the directives of their prudential regulatory and perhaps are even barely aware of the work of the FFIEC and the CFPB, but both play an important role in the regulatory environment.

Cybersecurity is one of the main focuses of the FFIEC - download our infographic to learn four of the main areas to pay attention to.

Regulatory Developments Impact Your Next Vendor Management Exam eBook

Branan Cooper

Written by Branan Cooper

Branan Cooper is the Chief Risk Officer at Venminder. Branan has nearly 30 years of experience in the financial services industry with a focus on the management of operational and regulatory processes and controls—most notably in the area of third party risk and operational compliance. Branan leads the Venminder delivery team as the third party risk management subject matter expert in residence. Branan also serves as an industry thought leader. He's a member of InfraGard and the Professional Risk Management Industry Association (PRMIA). And, he was selected in 2018 as an advisor to the Center for Financial Professionals (CEFPro) and board member for the Global Sourcing Resource Network (GSRN).

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