A nonbank mortgage lender subject to the FTC Safeguards Rule divides information-security work among three managers but designates no Qualified Individual to oversee and implement its program. Does this arrangement meet the designation requirement?
Correct Answer
A) Deficient: one qualified individual must oversee the whole program
A. The lender must designate a Qualified Individual responsible for the program. Shared operational work does not replace the required accountable designation. The required qualification depends on the institution’s circumstances; the FTC does not prescribe a particular degree or title. Scope and exceptions: A team may still perform security work; the requirement does not demand a one-person department. An affiliate or service provider can supply the Qualified Individual, subject to required oversight and safeguards. The institution retains responsibility. Source: Coverage and reasonable security program, item a — https://www.ftc.gov/business-guidance/resources/ftc-safeguards-rule-what-your-business-needs-know
Why This Is the Correct Answer
A. The lender must designate a Qualified Individual responsible for the program. Shared operational work does not replace the required accountable designation. The required qualification depends on the institution’s circumstances; the FTC does not prescribe a particular degree or title. Scope and exceptions: A team may still perform security work; the requirement does not demand a one-person department. An affiliate or service provider can supply the Qualified Individual, subject to required oversight and safeguards. The institution retains responsibility.
Why the Other Options Are Wrong
Option B: Deficient: each of the 3 managers must hold a security certification
It invents a certification requirement for all three managers.
Option C: Sufficient: the rule requires oversight but names no single person
The rule expressly calls for a designated individual.
Option D: Sufficient: splitting the duty across 3 managers spreads the risk
Dividing tasks cannot cure the missing designation.
Exam Tip
Delegate tasks while retaining clearly designated, qualified oversight.
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