Dive Temporary:
- The Client Monetary Safety Bureau (CFPB) is making adjustments to its supervisory operations surrounding truthful lending legal guidelines and unfair, misleading and abusive acts and practices (UDAAPs), in an effort to higher fight discrimination in client finance, it introduced in a press launch Wednesday.
- The CFPB will scrutinize banks’ and different firms’ compliance with client safety guidelines to determine and root out discriminatory conduct that violates federal prohibitions towards unfair practices, even in conditions the place truthful lending legal guidelines might not apply.
- The company on Wednesday printed an up to date examination guide, which spells out how discriminatory conduct by monetary establishments can infringe upon the CFPB’s obligation to stop unfair practices, with out expressly violating truthful lending legal guidelines.
Dive Perception:
The CFPB’s newly up to date examination guide for evaluating UDAAPs establishes that discrimination can represent “unfairness” when it causes customers hurt they can not fairly keep away from and doesn’t provide advantages to customers or competitors. As well as, discrimination can qualify as “unfairness” no matter whether or not the motion was intentional, and no matter whether or not the motion is roofed by the Equal Credit score Alternative Act (ECOA).
“For instance, denying entry to a checking account as a result of the person is of a specific race could possibly be an unfair apply even in these cases the place ECOA might not apply,” the bureau wrote in Wednesday’s press launch.
The CFPB will hunt for discrimination in all client finance markets, together with credit score, servicing, collections, client reporting, funds, remittances and deposits.
The company will look at monetary establishments’ promoting, pricing and different practices to make sure that firms are doing all they’ll to get rid of unlawful discrimination.
The bureau plans to ask the businesses it supervises to disclose their processes for assessing dangers and discriminatory outcomes, “together with documentation of buyer demographics and the affect of merchandise and costs on totally different demographic teams.”
“When an individual is denied entry to a checking account due to their faith or race, that is unambiguously unfair,” CFPB Director Rohit Chopra mentioned. “We will probably be increasing our anti-discrimination efforts to fight discriminatory practices throughout the board in client finance.”
Truthful lending legal guidelines like ECOA enable regulators to research whether or not establishments lengthen credit score on an equitable foundation. Different discriminatory practices are prohibited beneath the Client Monetary Safety Act (CFPA), which forbids UDAAPs in client finance.