Key takeaways
- Discover said it entered into a consent agreement with the FDIC over consumer compliance issues within the company's banking unit.
- Discover said it would improve its compliance management system and make other changes, and it was not fined. by regulators.
- The company noted that this matter was separate from an FDIC investigation into the misclassification of certain credit card fees.
Discover Financial Services (DFS) was the best-performing stock in the S&P 500 on Monday, as shares gained 4.9% after the credit card provider reached a consent agreement with federal regulators over loopholes of the compliance management system of its Discover Bank unit.
In July, the company revealed that it had received a proposed consent order from the Federal Deposit Insurance Corporation (FDIC) on what it said was “related to consumer compliance” , without giving details.
Discover said that as part of the consent order, it will “enhance its consumer compliance management system and improve related corporate governance and enterprise risk management practices.” The company added that it would strengthen board oversight on these issues. Discover said it has taken “significant steps” to strengthen its compliance management system and address other issues related to the consent order. He said no fines or monetary penalties had been imposed to resolve the problem.
The company also noted that this action is not related to a separate FDIC complaint that, beginning in 2007, Discover misclassified credit cards in its highest pricing tier for merchants and acquiring merchants. Discover explained that the investigation into this matter is ongoing and could result in “additional enforcement actions or other supervisory activities by the FDIC and other regulatory agencies.”
Despite Monday's gains, Shares of Discover Financial Services remained in negative territory for the year. Last week they reached their lowest level since February 2021.
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Source: investopedia.com