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In March the CFPB announced it would be targeting unfair discrimination in consumer finance. “Consumer finance” is a broad term, but it absolutely includes banks.
Saying there is no fair lending law for deposits is so last February. With the notice that any illegal discriminatory action for any deposit account or other product or service is “unfair” the CFPB said UDAAP, and UDAP for those responsible to the OCC, FDIC, FRB and NCUA, will apply.
The Biden Administration and therefore the banking regulatory agencies have all said there is no room for treatment that is not completely equal when it comes to race, color, religion, national origin, sex, marital status, age, or because they receive public assistance. Now think outside the box. Are any of these directly or indirectly related to any part of the design or delivery of any product or service you offer? Is this being considered every time a committee meets and talks about a new product or service. This includes who it is targeted to and appropriateness of it to that target market, how it is advertised and where, how it is presented to a customer, the disclosures, and the execution and follow-thru to ensure all is done as it should be. The OCC’s Michael Hsu said in a speech, “Fair access to credit builds wealth, and when those doors are shut, or simply made harder to open or pass through, minority and underrepresented groups can be left behind for generations. This inequality gap, this discrimination, must end.” This attitude transcends loans and now includes Operations and all products and services.
The good news is your Loan Admin, compliance and audit programs are already in place. The bank now needs to figure out some re-tooling so that what should be a daily practice on the loan side carries over to Ops. Ad reviews, risk rating, planning products and services, delivering all these fairly, following up and checking what was done, and the results. That’s what this hour will cover.
WHO SHOULD ATTEND:
Compliance, audit, operations personnel including mid-management, and anyone working on product and service design and delivery for the bank. Include those managing the CRA program as it is impacted directly by UDAP/UDAAP successes and failures.
Questions & Answers