An FTC Safeguards Rule-covered lender has a board and is not eligible for the small-institution exemption. Its Qualified Individual briefs executives orally every six weeks but submits no written report. What is missing?
Correct Answer
B) Regular written reports to the board, at least annually
B. Regular written board reports are required, at least annually. Six-week oral updates satisfy neither the written format nor the specified board-reporting obligation. The report addresses program compliance and material security matters, including management responses and recommended changes. Scope and exceptions: The facts exclude the limited small-institution exemption. Where no board or equivalent exists, the responsible senior officer receives the report. Separate breach-notification duties are not satisfied merely by reporting internally. Source: Information security program, item i; coverage and breach-notification sections — https://www.ftc.gov/business-guidance/resources/ftc-safeguards-rule-what-your-business-needs-know
Why This Is the Correct Answer
B. Regular written board reports are required, at least annually. Six-week oral updates satisfy neither the written format nor the specified board-reporting obligation. The report addresses program compliance and material security matters, including management responses and recommended changes. Scope and exceptions: The facts exclude the limited small-institution exemption. Where no board or equivalent exists, the responsible senior officer receives the report. Separate breach-notification duties are not satisfied merely by reporting internally.
Why the Other Options Are Wrong
Option A: An oral report every six weeks is sufficient because it is more frequent
Greater frequency cannot replace the required format and recipient.
Option C: A written report only after a material security incident
Routine reporting is not conditional on a material incident.
Option D: A written report to the FTC every two years instead of board reporting
A biennial FTC report is not a substitute for board reporting.
Exam Tip
Check reporting format, recipient, frequency and substance separately.
More Federal Laws Questions
Before the team acts on a production meeting, a training manager must address SCRA Interest Rate Cap. Which response is most defensible?
A team member asks about RESPA Kickbacks and Referrals in an investor-delivery review while trying to confirm the rule-based response. Which response should the loan team use?
During a disclosure desk review, the loan team encounters an RESPA Servicing Transfer issue. Which response should avoid a shortcut that would misapply the rule?
A disciplinary-risk review raises a question about TILA APR and finance-charge rules. Which action should the renewal specialist recommend?
An MLO is reviewing procedures for a case where a compliance analyst asks why covered mortgage application data is collected. What is the proper handling?
A consumer complaint response raises a question about GLBA privacy requirements. Which action should the state compliance officer recommend?
Before the team acts on a branch training session, a policy analyst must address RESPA Servicing Transfer Notice. Which response is most defensible?
A training manager is resolving RESPA Referral Fees during an internal audit sample. Which action best fits the rule?
An operations lead is resolving ECOA Prohibited Discrimination Bases during a loan-team coaching session. Which action best fits the rule?
In a file escalation meeting, a disclosure specialist sees facts tied to TILA Closing Disclosure. What should the file reflect?
People Also Study
General Mortgage Knowledge
20% of exam
Mortgage Loan Origination Activities
27% of exam
Ethics, Fraud & Consumer Protection
18% of exam
Uniform State Test Content
11% of exam