Thursday, June 23, 2016

Advertising Compliance: Getting Ready for the Banking Examination - Part Two - Risk Assessments

Jonathan Foxx
President & Managing Director
Brokers Compliance Group

In Part One of this two-part series, I noted that “the regulator will determine whether advertisements and promotional materials provide timely, clear, and understandable information about the existence of costs, payment terms, penalties, or other terms and charges, the reasons for their imposition, and the salesperson’s compensation from cross-sales.”[i]

Just as an examiner will review the advertising materials using various metrics and means, so also should the mortgage loan originator use three tools to ensure compliance with advertising rules.

The tools are:
  • Advertising Manual, with a host of supporting forms;
  • Record Retention, containing all advertisements and reviews thereof; and
  • Forms and Checklists, constituting all loan products and origination methods.
In this article, we are going to explore these three tools. While the considerations do not encompass all the requirements and conditions relating to each tool, I hope to provide a general understanding of how these should be designed and, most importantly, how they must be interfaced with one another.


At the outset, let me clarify the importance of distinguishing advertising policy and procedure from an advertising manual. While the former often does not contain the latter, the latter most certainly contains the former. That is to say, a policy and procedure may or may not be actively given to employees; however, a manual is always given to them. The advertising policy may set forth rules and philosophy, but the manual is the actual implementation guidelines that an employee consults to find decisive standards.