Definitions of Findings and Alleged Violations

This policy defines the finding types in the system, and the term “alleged violation."

The policy also outlines the use of these terms in the State Examination System as they relate to the examination/investigation of a company or the processing of a consumer complaint about a company.

Definitions

Finding.
An issue identified by a state agency user during the supervision of a financial institution in SES. The finding may describe the company’s strengths and/or weaknesses regarding its compliance management system, assess the company’s compliance with consumer protection laws or regulations, or any potential consumer harm. A finding may be either a violation, recommendation or observation. These terms are defined below. Findings are used in the Supervisory Activity (“SA”) section of the system to elevate an issue identified during examinations and investigations. Findings may be entered by the agency user at any time before the report of examination or investigation is sent to the company, but generally as procedures or loan file reviews are completed.
Types of Findings
Violation.
A type of finding in SES. A violation includes an act or omission by the company that amounts to the transgression of a law, regulation, rule, or administrative code. The agency may require the company to take steps to correct the violation and there will generally be a follow-up from the state agency regarding the plan or steps that the company will take to correct the violation.
Recommendation.
A type of finding in SES. Offers an opportunity for the company to improve compliance or risk management posture with a statute, regulation, rule, company policy/procedure or other regulatory expectation.
Observation.
A type of finding in SES that a company should take into consideration in order to improve their overall risk management posture or compliance with an internal policy or regulatory expectation.
Alleged Violation.
This type of potential finding is used only in the SES Consumer Complaints area of the system. An alleged violation is a potential finding against the company identified by the state agency during the handling of a complaint about the company in SES Consumer Complaints. Alleged violations are identified by the state agency during the agency’s research and assessment of facts and circumstances surrounding the consumer complaint, and communication with the company about the complaint.