The Consumer Financial Protection Bureau (CFPB) recently issued a new Fair Lending Report which discusses their efforts to ensure fair, equitable and nondiscriminatory access to credit for all consumers. The report includes regulatory expectations, which the CFPB expects all institutions to uphold, and related enforcement actions.
The report addresses what the CFPB considers in the quality of an institution's fair lending compliance management system. While the appropriate quality scope will vary based on an institution's size, complexity and risk profile, the report states that common features include:
- An up-to-date fair lending policy statement;
- Regular fair lending training for all employees involved with any aspect of the institution's credit transactions, as well as all officers and board members;
- Ongoing monitoring for compliance with fair lending policies and procedures, and appropriate corrective action if necessary;
- Ongoing monitoring for compliance with other policies and procedures that are intended to reduce fair lending risk (such as controls on loan originator discretion), and appropriate corrective action if necessary;
- Review of lending policies for potential fair lending violations, including potential disparate impact;
- Depending on the size and complexity of the financial institution, regular statistical analysis, as appropriate, of loan-level data for potential disparities on a prohibited basis in pricing, underwriting, or other aspects of the credit transaction, to include both mortgage and non-mortgage products such as credit cards, auto lending, and student lending;
- Regular assessment of the marketing of loan products; and
- Meaningful oversight of fair lending compliance by management and where appropriate, the financial institution's board of directors.
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