Banks’ Reliance on Automated Compliance Systems Draws CFPB’s Eyes

Big banks and other consumer financial services firms’ increasing reliance on automated systems to perform basic functions is drawing federal regulators’ heightened scrutiny.

The Consumer Financial Protection Bureau established in the fall of 2021 new procedures for its examiners to review companies’ information technology systems, ranging from compliance management and company units’ communications to credit-determination algorithms set up to make credit decisions.

Since then, Wells Fargo & Co., fintech Hello Digit LLC and other companies have been targets of the CFPB’s enforcement or critical reports for failures in their automated compliance and consumer response systems.

Automated systems have become a ...