The CFPB today signaled its intention to ramp up supervision activity around fair lending laws and unfair, deceptive and abusive acts and practices. Specifically, the CFPB said it “will scrutinize discriminatory conduct that violates the federal prohibition against unfair practices. The CFPB will closely examine financial institutions’ decision-making in advertising, pricing, and other areas to ensure that companies are appropriately testing for and eliminating illegal discrimination.”
In addition, “CFPB examiners will require supervised companies to show their processes for assessing risks and discriminatory outcomes, including documentation of customer demographics and the impact of products and fees on different demographic groups,” the bureau said. “The CFPB will look at how companies test and monitor their decision-making processes for unfair discrimination, as well as discrimination under [the Equal Credit Opportunity Act].”
The CFPB also published an updated exam manual outlining how it will examine for UDAAPs. The guide outlines the legal standards by which regulators evaluate UDAAPs and provides examples of unfair, deceptive and abusive acts and practices.