I am having a hard time understanding this case could you please read and provide a succinct explanation. This is the only information provided.

Review the following "Report of Examination" covering Consumer Compliance. The bank examined, XYZ Bank, has been informed that it is going to receive a "3" rating on Consumer Compliance. The Bank strongly disagrees with the rating and feels that they should have received a rating of "2." Review the Exam (below) and Session 6 will take you through the discussions between the examiner and the Compliance Officer (who disagrees with the rating).

General Description of OCC Ratings Guidelines for Consumer Compliance. Banks receive a rating of between "1" (best) and "5" (worst) on Consumer Compliance:

An institution rated "1" is in a strong compliance position. In order to receive a"1", the bank must have an effective compliance program, with very strong internal procedures and controls. This bank must ensure that changes in consumer statutes and regulations are promptly reflected in the institution's policies, procedures, and compliance training (all of which combine to form the bank's Compliance Program). A "1" rated bank must provide adequate training for its employees. There must be no evidence of discriminatory acts or practices. If violations are found internally, any deficiencies are promptly corrected.

An institution rated "2" is in a generally strong compliance position. In order to receive a "2", management must be shown to be capable of administering an effective compliance program. Although controls are in place, violations have nonetheless occurred in a "2" rated bank. Those violations, however, involve technical aspects of the law or result from oversight on the part of operating personnel. Slight modifications to the program or establishing additional review/audit procedures would likely eliminate many of the violations. Compliance training is satisfactory and there is no evidence of discriminatory acts or practices, reimbursable violations, or practices resulting in repeat violations.

An institution rated "3" is in a less-than-satisfactory compliance position. Violations may be numerous and previously identified practices resulting in violations may remain uncorrected. Overcharges, if present, involve a few consumers and are minimal in amount. There is no evidence of discriminatory acts or practices. Although management may have the ability to effectuate compliance, increased efforts are necessary. Operating procedures and controls have not proven effective and require strengthening by, among other things, designating a compliance officer and developing and implementing comprehensive and effective compliance program.

An institution rated "4" requires close supervisory attention and monitoring to promptly correct the serious compliance problems. Numerous violations are present and overcharges likely affect a significant number of consumers and involve a substantial amount of money. Often practices resulting in violations and cited at previous examinations remain uncorrected. Discriminatory acts or practices may be in evidence.

If an institution receives a "5" Consumer Compliance Rating, it needs the strongest supervisory attention and monitoring. It is substantially in noncompliance with consumer laws and regulations. Management has demonstrated their unwillingness or inability to operate within the scope of

consumer laws and regulations. Discrimination, substantial overcharges, or practices resulting in serious repeat violations are present.

Summary of Consumer Compliance Section of the Report of Examination for XZY Bank

Compliance Management is Less Than Satisfactory and shall be assigned a rating of "3". Our review of the Compliance Program (policies and procedures) supports this conclusion. The quality of compliance risk is less than satisfactory. While Management appears to be capable of administrating an effective program, it has failed to do so. The problems that have been discovered lead us to conclude that although there may be well-qualified persons in Compliance, controls are not being effectively managed. Although portions of the compliance function appear in order, the problems that XYZ Bank has sustained regarding the number and handling of consumer complaints, the issue with the copying of military identifications and the issue related to replacement debit card fees leads us to this rating.

Generally, compliance with consumer laws and regulations is satisfactory. The large number of branches being opened and CRA challenges that come with that makes the risk factors high. However, management seems to have taken steps to mitigate that risk by adding competent staff to the CRA teams. Servicemember Civil Relief Act (SCRA) compliance is generally satisfactory. A sampling of six months' worth of files found that in two instances, the bank copied identification for customers in the military. Although the policy prevents such an action, there is not a procedure in place to prevent it.

Please Determine if you agree with the examiner or the Compliance Officer based upon the ratings guidelines for an OCC examination on Consumer Compliance as described in the case and provide your reasons.