On March 19, 2019 the OCC announced $25 million in civil monetary penalties against Citibank, N.A. (Citibank) related to Fair Housing Act (FHA) violations. As reported in October 2019, Citibank was under scrutiny by regulators for its “relationship pricing” program. Under this program, the bank offered mortgage interest rate and closing cost discounts to customers based on their deposit and investment balances with Citibank.

The intent of this program was to foster deeper relationships with bank customers; however, the OCC determined the program lacked sufficient controls to ensure that eligible customers received the benefits as designed. These control weaknesses, according to the OCC, led to pricing disparities on the basis of the race, ethnicity and sex of Citibank borrowers.

In addition to the $25 million civil monetary penalty, Citibank will reimburse approximately 24,000 affected customers in reparations totaling around $24 million.

This latest public action underscores the need for financial institutions to implement strong compliance controls in administering its pricing policies, including special programs intended to deepen customer relationships. Effective monitoring, statistical analysis and other controls would have allowed Citibank to execute the program in a manner that would have achieved its strategic goals without increasing its exposure to Fair Lending risk.