What Is a Matter Requiring Attention (MRA) in Banking?

Understanding Matters Requiring Attention

A Matter Requiring Attention (MRA) is a formal communication from regulatory bodies to financial institutions, signaling areas of concern or deficiencies needing corrective action. These communications are directives for improvement, not punitive measures. MRAs highlight practices deviating from sound governance, internal control frameworks, or risk management principles, which could adversely affect the bank. They also address non-compliance with laws and regulations, such as the Bank Secrecy Act or consumer protection statutes.

Regulatory agencies like the Office of the Comptroller of the Currency (OCC), the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC) issue MRAs. Concerns encompass issues like weaknesses in internal controls or shortcomings in risk assessments. Operational inefficiencies or governance issues may also lead to an MRA.

Each MRA includes a description of the issue, often using a “Five Cs” format: Concern, Cause, Consequence, Corrective Action, and Commitment. This structure ensures the bank understands the deficient practice, its root cause, and potential negative effects. The MRA also outlines expected corrective actions and a timeframe for resolution.

MRAs prompt financial institutions to remediate weaknesses and implement sustainable controls to prevent recurrence. While confidential, their effective resolution is important for maintaining regulatory compliance and banking system stability. Failure to address these matters can lead to more stringent regulatory actions.

The MRA Issuance Process

Matters Requiring Attention originate from ongoing supervisory activities. These include comprehensive regulatory examinations, targeted audits, or continuous monitoring of a bank’s operations. During reviews, examiners evaluate the bank’s financial condition, policies, procedures, and risk management practices to identify deficiencies or non-compliance.

Upon identifying a concern, examiners communicate findings to the bank’s management and board of directors. This communication often occurs through a Report of Examination (ROE) or a supervisory letter. The ROE conveys the bank’s overall condition and summarizes supervisory activities and findings.

MRAs are findings within these reports, indicating issues requiring formal tracking and remediation. An MRA in an examination report signifies the regulatory body expects a required change to address the weakness. The process emphasizes these are not merely suggestions but formal requirements for improvement.

The regulatory issuance process involves a structured approach to ensure identified weaknesses are clearly articulated and formally documented. This notification establishes a clear expectation for the bank to develop and implement a plan to address concerns within a defined period.

Bank Response to an MRA

Upon receiving an MRA, a bank’s initial steps involve acknowledging the communication and disseminating it internally to relevant departments and senior management. The board of directors is also formally informed. Clear ownership for each MRA is established, assigning responsibility to specific individuals or teams.

The development of a formal remediation plan, often called an action plan, follows the initial acknowledgment. This plan details steps the bank will undertake to correct identified deficiencies. It includes assigned responsibilities, projected timelines for completion, and methods for monitoring progress.

To oversee remediation efforts, banks establish internal governance structures, such as dedicated committees or working groups. These groups guide the action plan’s implementation, ensuring corrective measures are effective and sustainable. The plan may also consider resource allocation and intermediary steps.

Thorough documentation of all remediation activities is important. This documentation provides a clear audit trail of the bank’s efforts to address the MRA, necessary for internal review and subsequent regulatory assessment. The bank’s response focuses on demonstrating a systematic approach to resolving supervisory concerns.

Monitoring and Resolution of MRAs

Continuous internal monitoring and reporting are important for managing MRAs after a remediation plan is in place. Banks track action plan implementation, regularly assessing progress against established timelines and milestones. This ongoing oversight ensures corrective actions remain on schedule and effectively address the root causes of identified deficiencies.

Internal validations confirm the effectiveness of corrective actions implemented. These validations help the bank verify that changes made have remediated the issue and established sustainable controls to prevent recurrence. Results of these internal assessments are then compiled into status updates for communication with regulatory bodies.

Throughout the remediation period, banks maintain open communication with the regulatory body, providing regular progress reports. This dialogue allows regulators to stay informed about the bank’s efforts and provides an opportunity for clarification or guidance. The goal is to demonstrate that the bank is diligently working to address and resolve the MRA.

An MRA is officially “closed” by the regulatory agency once satisfied that the bank has effectively remediated the identified issue. This closure signifies that the bank has implemented sustainable controls and that the deficiency no longer poses a concern. The process from issuance to closure can sometimes extend for more than a year, particularly for complex MRAs.