Certified Regulatory Compliance Manager (CRCM) Practice Exam

The correct answer hinges on the concept of ensuring that transactions between a bank and its non-bank affiliates maintain competitive fairness and consumer protection standards. When a bank provides services to a non-bank affiliate, it must do so under terms that are substantially similar to those available in the broader market for similar services offered to non-affiliated entities. This requirement is in place to prevent potential abuses, such as preferential pricing or terms that could distort competition.

By requiring that the terms of the contract are substantially the same as those prevailing for comparable non-affiliated transactions, regulators aim to ensure that the bank's actions do not result in any unfair advantage for the non-bank affiliate. This regulates potential conflicts of interest and promotes a level playing field in the marketplace, which is crucial for maintaining the integrity of financial systems.

In contrast, the other options do not adequately address the regulatory framework designed to safeguard against unfair practices. For example, a contract being cancellable at any time does not ensure fairness or comparability of terms; it merely dictates an aspect of the contract's flexibility. Similarly, providing exclusive services to a non-bank affiliate does not align with promoting market-based terms and could create unnecessary dependence or risk. Lastly, while obtaining prior written regulatory approval might be necessary in other contexts