Fair lending: focus on the forest, not the trees.

• Author: Pry, Carl G.
• Position: MARKETING COMPLIANCE

WE ALL KNOW THAT FAIR LENDING is at the top of the regulatory concern list these days, or at least it's awfully close. And with new Unfair, Deceptive or Abusive Acts or Practices (UDAAP) standards coming down the road, any practice considered to be excluding customers from your bank's products must be carefully scrutinized, if not prevented. Examiners are looking at marketing campaigns more closely than ever before, and they are looking for practices that fall into regulatory "gray areas"--practices that aren't written into regulations in so many words, but might still be considered discriminatory or even abusive.

In the fair lending realm, it's standard procedure that your advertising must not be structured in such a way as to make any group of persons feel as though your bank doesn't want their business (particularly if that group is a protected class under fair lending laws and regulations). An example is not adequately depicting all types of people in your advertising for loan products. Por instance, if the only people pictured in any of your bank's ads were nonminorities, one might get the impression that you don't really want anyone else's business. People become very sensitive to models in ads, and if there is never anyone that "looks like me" it could he seen as discriminatory, even though you have a policy to take applications from all comers (which we all do). It still sets a tone.

This is not a new concept: in the past, some banks learned this lesson the hard way. For instance, a bank operating in the southwest United Stales published many a loan ad, but never pictured any Hispanic models, at a time when Hispanics made up a substantial portion of the bank's marketing area. The banks marketing program was found to have a discriminatory effect on protected class individuals--in other words, they made Hispanic consumers feel unwelcome, and therefore...