Bank of America Corporation BAC has been penalized by the Office of the Comptroller of the Currency (“OCC”) for violation of consumer protection laws. The bank will pay $30 million and improve compliance practices as well as reimburse excess interest payments and fees to nearly 73,000 affected customers.
BofA had been accused of failure to comply with the Servicemembers Civil Relief Act (“SCRA”), due to lack of proper policies and procedures. The law ensures special consumer protection for military members.
The OCC alleged that from 2006 till date, BofA undertook improper legal actions against military clients for delinquent credit card accounts and overdrafts. Also, the bank officials filed some court documents without proper authentication.
The OCC said, “The enforcement action is intended to correct deficiencies in the bank’s practices and procedures related to its SCRA-compliance program and to address the preparation and notarization of affidavits and other sworn documents used in the bank’s debt collection litigation.”
BofA has also been ordered to enhance its enterprise-wide compliance risk-management program. Notably, the bank has since improved its compliance-related practices and undertaken several initiatives to manage compliance risk in the future.
Andrew Plepler, BofA’s Global Corporate Social Responsibility and Consumer Policy Executive, said, “We have taken significant steps over the last several years, and will take further steps now, to ensure we have the right controls and processes in place to meet – and exceed – what is required by law and what our customers deserve and expect.”
We believe that BofA’s initiatives to improve its compliance program would go a long way in restoring confidence of investors and customers in the stock. However, the past misconducts will continue to hamper the bank’s performance.
Currently, BofA carries a Zacks Rank #3 (Hold). Better-ranked banks include JPMorgan Chase & Co. JPM, Northern Trust Corporation NTRS and Western Alliance Bancorporation WAL. All these stocks sport a Zacks Rank #2 (Buy).
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