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Okay, here’s a new one. Have you heard about this? Your Quality Control audits may work against you in a court of law (Hazardous QC).
Wells Fargo may get slammed in court partly as a result of the findings from their internal quality control audit findings. Now, ain’t that a hole in the boat?
With all the recent chatter about having a comprehensive QC program, the reward may be that lenders get dragged into court because of what they uncover in their own audits.
But hey, let’s just hold on a minute there. In reality, it’s not the audit results that might get Wells in trouble, or any other lender for that matter. It’s the lack of attention to the findings and failure to take corrective action accordingly.
The intent of the audits is to ensure a lender and its employees are performing as expected in accordance with all applicable federal and state laws, as well as certain secondary market requirements. CFPB requires that a lender have in place a Compliance Management System to ensure, among other things, that a lender reports results to senior management and has a system to monitor any required corrective actions. The mere reporting of the defects or discrepancies in not sufficient. Something needs to be done to correct them and ensure they do not reoccur. Wells may be in trouble because they failed to listen to the messenger.
It’s not the QC program which may get a lender in trouble. It’s a lender’s decision to ignore, or worse yet, alter, their audit results to make things appear to be okay. If so, you’re just fooling yourself. Sooner or later the problems will bubble to the surface and by then it may be too late to do anything about them. It is like ignoring a small group of termites. If you don’t address the issue upfront, the entire house may get infested. Then, it’s too late.
Do you have a QC plan that can uncover deficiencies in a timely manner and identify potential problem trends? Do you have a formal, timely senior management reporting system? How is corrective action documented and tracked? What related training takes place? If you end up in court, will your QC program help or hurt?
Don’t shoot the messenger. The QC function and auditors are a valuable component in a company’s success. They are the inspectors who will find the termites before the house is destroyed. It’s up to you to do something about it.
When you think audit; think corrective action as well! Heed this message.
