Sen. Sherrod Brown (D-Ohio) recently called on regulators to ramp up their oversight of independent consultants in the financial servicing industry and to increase efforts to ensure oversight when consultants are hired by the federal government.
Last week, Deloitte Financial Advisory Services agreed to work with New York’s Department of Financial Services to develop rules for consultants involved in regulatory actions. Following the agreement, Brown sent a letter to the OCC and Federal Reserve requesting that the regulators develop similar standards for all independent consultants.
“Because these firms work for the banks that they oversee, there needs to be more transparency and accountability when private consultants are involved in regulatory action,” Brown said. “These firms should not be stepping in without explicit, objective standards to ensure an independent consultant’s qualifications and conduct. It’s past time for the Federal Reserve and OCC to enact uniform standards to effectively manage these independent firms.”
A report issued by the Government Accountability Office earlier this year revealed a lack of regulatory oversight for independent consultants hired to oversee the Independent Foreclosure Review Process set up after news of widespread mortgage servicing errors arose.
“Independent consultants have repeatedly asserted that they maintain the highest professional standards,” Brown said. “But…these internal guides and the ad hoc standards used by regulators can prove insufficient. Without written guidelines and transparent processes, it is impossible to ensure the integrity of a system that relies upon consultants paid by banks to report on their regulatory compliance. This lax system undermines financial regulation at every level and puts our economy at risk.”