The CFPB has made a concerted effort to make its programs and services accessible to financial consumers with limited proficiency in English. While this paradigm is noteworthy on its own, Paul Hastings, et al feel this could be a signal of things to come:

While these recent agency activities are noteworthy developments in their own right, they also may be signaling a new consumer financial compliance front that has significant implications for the offering and provision of consumer financial products and services to our country’s ethnically diverse population. In an odd twist, these changes also have implications regarding the supervision, regulation, and oversight of such activities by a host of other federal and state regulatory authorities.

Certainly, the issue of language-based discrimination is not new. Federal consumer financial law requires that consumer financial services transactions be conducted in a manner understandable to the consumer. It remains unclear, however, whether this means that financial services must be offered in a consumer’s native language, English, or both. Some states require consumer financial services be offered in English and another language; and there are federal laws that require English language disclosures or translations for certain consumer financial transactions. In recent years, federal regulators have increased their scrutiny of consumer financial services and how such services are offered to LEP consumers.

In the context of Fair Lending compliance, the ECOA does not explicitly prohibit discrimination on the basis of language. However, its allowance for using non-English documents and its broad mandate to promote the availability to credit to all creditworthy consumers may be interpreted in a manner that opens the door to additional scrutiny of marketing and advertising activities. The CFPB has held institutions liable under ECOA for offering different products based on national origin; it would not take a great leap from this perspective for the CFPB to place scrutiny on language as a means of preventing prohibited basis groups from gaining equal access to credit. In addition, as the authors note, this basis for discrimination has implications under EFTA and UDAAP. Simply put, financial institutions that service populations with substantial segments of non- or limited-English speaking consumers should take these trends into consideration when assessing Fair Lending risk.

April 21st, 2015|