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40 CONSUMER-FACING FIELD SERVICES Setting the Standard for Third Party Vendor Compliance Management Once upon a time in 2008, the world changed as we knew it, with our country grappling with the biggest economic crisis since the Great De- pression. In 2010, sweeping financial reform was passed by Congress in the shape of the Dodd- Frank Act, established to prevent the recurrence of events that caused the crisis in the first place. An output from the Dodd-Frank Act was the establishment of the Consumer Financial Protection Bureau (CFPB), with its goal focus- ing on consumer protection in the financial ser- vices sector, with jurisdiction including banks, mortgage servicing operations, foreclosure relief services, and debt collectors. In the interest of clarification, CFPB issued a bulletin (CFPB 2012-03) stating that "financial institutions under Bureau supervision may be held responsible for the actions of the companies with which they contract. e Bureau will take a close look at service providers' interactions with consumers. It will hold all appropriate companies accountable when legal violations occur." CFPB Director Richard Cordray added, "Consumers are at a real disadvantage because they do not get to choose the service providers they deal with — the financial institution does. Consumers must not be hurt by unfair, decep- tive, or abusive practices of service providers. Banks and non-banks must manage these rela- tionships carefully and can be held accountable if they (the service providers) break the law." Financial institutions regularly contract with and outsource to third-party service providers for the marketing and sales of products and the provision of various consumer-facing field ser- vice activities, including property preservation, inspections, appraisal & valuations, asset man- agement, hazard claims, and legal processing. CFPB's guidance to financial institutions is that they must ensure that consumers are protected from irresponsible service provid- ers and any potential risk to the consumer is mitigated by the financial institution, through effective management and complete oversight of all third-party vendors. Preventative steps recommended by the CFPB include: » Conducting thorough due diligence to verify that the service provider understands and is capable of complying with the law; » Requesting and reviewing the service pro- vider's policies, procedures, internal controls, and training materials to ensure that the service provider conducts appropriate training and oversight of employees or agents that have consumer contact; » Including clear expectations in the service provider contract for compliance, as well as appropriate and enforceable consequences for violating any compliance-related responsibilities; » Taking prompt action to fully address any problems identified through the monitoring process. Whether you are an appraiser, inspector, agent, broker, adjustor, or legal processor, there is no escaping the new regulatory world we live in. Adapting to this new reality is the property preservation industry, which provides field servic- es to financial institutions and mortgage servicers. ousands of third-party vendors specialize in the provision of property preservation, inspection, repair, maintenance, and rehab services alone. Banks, GSEs, and private investors rely on the various skills and capabilities of these specialist vendors to protect and safeguard their assets and investments while ensuring the protection and preservation of consumers and neighborhoods. During the fall of 2013, an initiative was undertaken to develop a criminal background check compliance standard to ensure finan- cial institutions had the required levels of risk mitigation in place when it came to vendor management and oversight. is standard, in turn, would ensure that field service vendors are compliant with various clients' requirements. A working group was established comprised of a major financial institution, national and regional vendors, the National Association of Mortgage Field Services, a major background check provider, and Aspen Grove Solutions™, a leading business technology solutions provider to the financial and mortgage services sectors. At the outset, it was accepted by all parties that background checks were nothing new. It was equally agreed that a level playing field did not exist as everyone was 'doing their own thing' and the list of initial findings below is testament to this: » No common standard » Different compliance requirements client-to- client and region-to-region » Multiple background checks resulting in multiple costs » No consistent background check review process » Limited client oversight of vendor's compliance » Impossible to prove compliance at the point of service Aspen iRecord™ was born in response to these findings to create an unbiased solution to address the gaps identified. Aspen iRecord™ is an independent and highly secure technology portal that offers much more than just a crimi- nal background check. It directly addresses the lack of an industry-wide compliance standard. Aspen iRecord™ is also a complete vendor management and compliance solution that ensures appropriate controls and procedures are in existence for all parties to manage their networks, vendors, and contractors. Aspen iRecord™ is welcomed by financial institutions, service providers, and consumers as a much needed standardized solution that provides a win/win scenario for all who wish to remain com- pliant in today's heightened regulatory environ- ment. By working together, we can all stay ahead of the 'regulatory curve' with ongoing, cohesive efforts from each part of our respective industries. If you are interested to learn more on how Aspen iRecord™ can help your organization or industry to develop and improve vendor compliance management, log on to www.aspenirecord.com or email sales@aspengrovesolutions.com. ADVERTORIAL

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