Updating Loan Application Forms for Compliance Review | CRCM Exam Preparation

D

The correct answer to this question is option C - Instruct the branch to destroy all obsolete forms and immediately begin using the current versions.

Explanation:

The compliance review has identified a significant issue in the use of obsolete loan application forms that do not include disclosures related to credit insurance sales. This is a compliance risk and must be addressed immediately. The first step in addressing this issue is to instruct the branch to destroy all obsolete forms and immediately begin using the current versions.

Option A - Determine which customers were affected and take corrective action may be necessary after the current loan applications are updated. However, the immediate priority should be to ensure that the bank is in compliance with regulatory requirements by using the updated loan application forms.

Option B - Contact the bank's primary regulator to determine the best course of action may be necessary in some circumstances, such as when the bank is uncertain about the regulatory requirements or if the bank has received enforcement action from the regulator. However, in this case, the regulatory requirements are clear, and the bank must take immediate action to ensure compliance.

Option D - Determine whether the branches use a separate document for required credit insurance sales disclosure may be a useful step in the longer term to identify any gaps in compliance with regulatory requirements. However, the immediate priority is to ensure that the bank is using the correct loan application forms.