Glossary term
Consent Order
Subject: Compliance and Regulation, Regulatory Supervision and Enforcement
Also known as: Consent Decree, Settlement order
A consent order is a negotiated enforcement outcome in which a firm agrees to the regulator's terms, such as a penalty or corrective steps, usually without admitting or denying the alleged wrongdoing.
Explanation
Instead of fighting a case to the end, the regulator and the firm agree an outcome. The order records the facts or allegations, the payment, and the undertakings the firm gives, often called compliance commitments: fix a control, hire independent reviewers, report progress at set dates. In some systems a court approves the agreement, in which case it is often called a consent decree; in others the regulator issues it directly. Settlement agreements reached at the end of an investigation work in much the same way. The firm gets certainty, often a lower penalty, and avoids a long dispute; the regulator saves resources. Breaching the terms can bring further action. Other firms read published consent orders to learn what regulators accept as a fix and what remedial work they expect to see.
Example
After finding weak sanctions screening at a bank, a regulator offers a settlement. The bank, without admitting liability, agrees to a penalty, upgrades its screening system within 12 months and hires an independent reviewer. The regulator publishes the consent order, and the bank reports progress every quarter.
Not to be confused with
- Cease and Desist Order
- A cease and desist order is imposed by the regulator after its own findings. A consent order is agreed with the firm.