Receiving a Matter Requiring Attention (MRA) from a regulator is a terrible feeling. No argument, an MRA does highlight a weak internal control or risk management practice. But post-financial crisis, MRAs are issued more frequently. And more recently, as smaller banks are receiving increased scrutiny, they too are experiencing the unpleasant reality of suddenly owning a list of MRAs. These MRAs can impact a bank’s Management rating or composite rating and they are expected to be raised to the board of directors. As I said, when you are the responsible executive, it is a terrible feeling. Ugh.
Those who are new to the process soon understand, clearing MRAs without bogging your business is tough. When the first MRAs arrive, no one inside the bank wants to slow down so manual processes are created to solve the problem. This isn’t sustainable. Executives at the big banks often say that they clear 3 MRAs and get 4 more. It pays to take the time to correct the MRA with a permanent and scalable solution. This requires attention to detail, collaboration among functions and investment in technology. It takes practice.
And, while working diligently to clear the issue, your resolution plan must be skillfully communicated to the regulator. Rare is the MRA that has a clear set of metrics or actions that will result in approved remediation. And frequently, regulator demands are difficult to implement or just not realistic in terms of the way the business works. The process of clearing an MRA is a bit of a negotiation.
While unpleasant, MRAs are a reality of today’s regulatory environment. Having a clear process from start to finish will minimize the pain and hopefully strengthen your bank as intended. Our partners have extensive experience in putting the right governance in place for accountability, issue resolution, prioritization, and execution. We also have demonstrated success in establishing an effective regulatory affairs communication flow. With a little guidance, it won’t be long before you too are experts at managing your list of MRAs.
We feel for you. Let us know if we can help.
