Establishing a 1071 Implementation Committee is essential for your institution to ensure Regulation 1071 compliance.
Your committee’s first order of business is preparing a risk assessment and reviewing the regulation to determine its impact on your processes and procedures.
It also manages the project, prepares progress reports for stakeholders, addresses problems like delays and lack of cooperation, and conducts training. Remember that some of the tasks can be outsourced, such as procedure review, training, validations of test or trial run SBLAR reporting to ensure data is captured and reported accurately.
Another critical step in implementing Small Business LAR 1071 is determining your Stakeholders.
At first glance, it may seem that only the commercial department and the compliance officer need to be involved. However, you need to look beyond the obvious and identify all potential 1071 stakeholders and define their responsibilities. They include:
Board of Directors
They are ultimately responsible for the compliance program. The Board of Directors should receive and review the Small Business LAR (1071) or Compliance Committee 1071 project minutes to ensure timely progress is being made.
Compliance Officer
The Compliance Officer provides resource material during implementation and monitors the process. The Compliance Officer is typically the project leader; however, he or she will delegate tasks as appropriate. Also, the Compliance Officer should identify who will be on the 1071 implementation committee.
1071, Small Business LAR, or Compliance Committee
To start, the committee should prepare a risk assessment and review the regulation to determine how this affects the institution and current processes and procedures. The committee manages the project; prepares progress for management and the board; reports problems, delays and lack of cooperation; performs testing; and does training. The committee may outsource some of these tasks.
Loan Processing/Lending Management
Lending participates by contributing how loan processing is affected and runs sample loans through the CRA/Fair lending software system to analyze the integrity and accuracy of the output. They will need to opine on how the vendors are performing as well.
Commercial Loan Officers
The commercial loan officers will be responsible for collecting the data so they will be highly involved.
Training Manager/HR Manager
Trainers will have to have a detailed understanding of the fields so they can teach others of these fields that will be collected under this LAR. Also, new 1071 procedures will need to be taught.
Internal or Third-Party Audit
Auditors or outsourced vendors need to be knowledgeable on the details of 1071 just like staff should be. Outside vendors should be vetted carefully.
Information Technology
The operating system requires updating and this must be coordinated with form vendors and lending platforms.
As always, we are here to help! TCA shows you “A Better Way” to comply with the Small Business LAR.
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