Expanded Anti-Discrimination Guidelines Create Compliance Challenge for US FIs

Financial institutions are scrambling to comply with heightened anti-discrimination standards across a range of financial services after the federal consumer watchdog agency issued new guidelines without industry input.

Currently, the government requires specific anti-discrimination policies in issuing credit, but the Consumer Financial Protection Bureau now will be looking for discrimination in all consumer finance markets, including credit, servicing, collections, consumer payments, remittances and deposits. In unveiling the changes March 16, the CFPB said it "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."

Financial advocacy groups praised the CFPB's decision as creating equitable treatment for consumers. Industry experts said it would create a tough new environment for banks that may not have the immediate tools to comply.

Gathering the information for testing and monitoring for potential discrimination "poses some real compliance challenges for institutions," said Tori Shinohara, a partner in Mayer Brown's Washington office and a member of its Consumer Financial Services group.

"In the noncredit context, it's much more difficult to test for that information and to come to an understanding of what the correct framework for testing is going to be," Shinohara said. "It's opening Pandora's box."

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