QUESTION
Recently, we completed a huge banking examination. During
the exit interview, we were shocked to find out that examiners thought we did not
provide language support in our assessment areas where most of the population
speaks a language other than English at home.
We have loan officers who speak a non-English language. But the examiners still claimed we were possibly excluding customers based on their language differences.
When the exit meeting was over, we all met in the conference room, and somebody said that it’s just too bad if the applicants don’t speak English – she said, “they’re here, they should speak English.” The CEO, who was present at this point, immediately shut her down.
Now, we are tasked with making sure our public facing contact ensures that we are responsive to issues involving limited English proficiency. We are in touch with your firm to monitor our actions, including retaining you for call calibration.
What are some of the challenges we face in addressing limited English proficiency?
ANSWER
As some of you know, I speak several languages. A few so-called
dead languages have made their way into my language fluencies. Of the ten languages, I have also
taught a few of them at the graduate level. So, language fluency is a matter of significant personal
interest. To some extent, I think some companies take the non-English speaking public
for granted when it comes to communicating with them in a language they
understand.
Thank you for contacting Lenders Compliance Group to assist you. In setting up your language sensitivity program, I think you’re on the right track to have us not only monitoring your forms, disclosures, and advertisements but also conduct call calibration, which audits your telephonic contact with the public. For more information about Call Calibration, contact us HERE. In responding to the examiners, you will want to demonstrate an affirmative defense, such as the foregoing actions would provide.
Our nation consists of many assessment areas, some of which contain communities where English is not the dominant language spoken at home or even in local commerce. How sensitive you are to their language needs is reflective of the understanding of your mission. And, in any event, if your company can’t bring itself to be sensitive to the language needs of the assessment area, regulators will indeed have a way of getting your attention with sufficient tact and circumstance to get you sensitized.
The Dodd-Frank Wall Street Reform and Consumer Protection Act emphasized the role of the CFPB in ensuring “fair, equitable, and nondiscriminatory access to credit.” The Act also prohibited any unfair, deceptive, or abusive act or practice (UDAAP). And, the Equal Credit Opportunity Act (ECOA) prohibits discrimination in lending based on sex, marital status, age, race, color, religion, national origin, receipt of public assistance benefits, or the exercise of rights under the Federal Consumer Credit Protection Act (which includes ECOA, the Truth-in-Lending Act, the Fair Credit Reporting Act, and the Fair Debt Collection Practices Act).
Be aware that the CFPB has instituted enforcement actions against companies that allegedly charged consumers with limited English proficiency (“LEP”) higher prices and offered more limited access to products and services than they charged and provided to more proficient English-speaking consumers.
In January 2021, the CFPB issued a Statement to encourage financial institutions to serve LEP consumers better and to provide principles and guidelines to assist financial institutions in complying with the Dodd-Frank Act, ECOA, and other laws.[i] The Statement offers guidance on how to provide access to credit in languages other than English in a manner beneficial to consumers.
Take note of how the Statement provides the following regulatory attempts to address LEP challenges:
· Regulation E's remittance transfer provisions (Electronic Fund Transfer Act) require disclosures in a language other than English in certain circumstances.[ii]
· Regulation E's prepaid account sections require financial institutions to provide pre-acquisition disclosures in a foreign language if the financial institution uses that same foreign language in connection with the acquisition of a prepaid account in certain circumstances.[iii]
· Regulation Z’s (Truth-in-Lending) provisions: (1) addressing obligations relating to advertising and disclosures in languages other than English for closed-end credit;[iv] and (2) providing that disclosures made in languages other than English must be available in English upon request.[v]
·
State statutes require transactions negotiated or conducted
primarily in a foreign language to include certain documents in the language of
negotiation under certain circumstances.[vi]
The CFPB issued the Statement after seeking input from stakeholders on fair lending compliance issues and access to credit issues. Some industry members expressed concern about the fact that over 350 languages (sic) are spoken in the U.S., so it would be unrealistic and cost-prohibitive for any financial institution to fulfill all the credit needs of all customers in all languages.
Understandably, commenters expressed uncertainty about how to prioritize one language over others and what factors to consider when seeking to provide services in one or more languages. Others mentioned the technical, operational, and compliance challenges specific to providing accurate translations.
Some folks were particularly concerned about fair lending risks in making decisions about language selection for non-English language services and about potential UDAAP risks in determining how and in which language to offer products and services, especially when not all products and services are provided in languages other than English.
In my view, the Statement sets forth rather vague guiding principles, such as:
· Encouraging financial institutions to serve LEP consumers better while ensuring compliance with relevant Federal, State, and other legal requirements;
· Instituting “pilot programs,” where financial institutions that wish to implement pilot programs or other phased approaches for rolling out LEP-consumer-focused products and services may consider doing so in a manner consistent with the guidelines outlined in the Statement;
· Developing new products and services, where a company considers developing a variety of compliance approaches related to the provision of products and services to LEP consumers consistent with the guidelines set forth in the Statement;
· Ensuring timely disclosure, allowing financial institutions to mitigate certain compliance risks by providing LEP consumers with clear and timely disclosures in non-English languages describing the extent and limits of any language services provided throughout the product lifecycle; and,
· Increasing access to credit, where companies consider extending credit under a legally compliant Special Purpose Credit Program (SPCP) to increase access to credit for certain underserved LEP consumers.
The following are several key guidelines provided in the Statement that are meant to suggest solutions when serving LEP consumers. However, be sure to evaluate any plans in the light of the applicable regulations (such as I mentioned above) as well as potential regulatory scrutiny.
· Language Selection. In determining whether to provide non-English language services to LEP consumers and in which language(s), financial institutions may consider documented and verifiable information such as the stated language preferences of its current customers or U.S. Census Bureau demographic or language data.
·
Product and Service
Selection. In determining which products and
services to offer in languages other than English, financial institutions may
consider various factors, including the extent to which LEP consumers use
particular products and the availability of non-English language services. In
determining when during the “product lifecycle” financial institutions can
offer services in non-English languages and the extent of those services, consider
activities and communications – whether verbal or written – that most
significantly affect consumers. In making product and service selections, review
relevant policies, procedures, and practices for features that pose a heightened
risk of unlawful discrimination, including distinctions in product offerings or
terms related to prohibited bases or proxies for prohibited bases (i.e.,
geography).
·
Language Preference
Collection and Tracking. Financial institutions may
collect and track customer language information in a variety of ways to
facilitate communication with LEP consumers in non-English languages. For instance,
in 2017, the CFPB officially approved a redesign of the Uniform Residential
Loan Application (URLA) that included a question to collect mortgage
applicants’ language preference. Although the FHFA opted to remove that question
when it approved the URLA changes (for Fannie Mae and Freddie Mac), financial
institutions may use similar questions to obtain customer language preference
information outside the mortgage lending context. However, financial
institutions must ensure that information collected about language preference
is not used in ways that violate applicable laws. Be careful! The CFPB has
brought enforcement actions against institutions for alleged violations that
resulted, at least in part, from the exclusion of consumers with non-English
language preferences from offers provided to similarly situated consumers
without those language preferences.
·
Translated Documents. Financial institutions must comply with Federal
and State laws that require translated documents under certain circumstances.
If the translation of documents is not mandated, financial institutions may
assess whether and to what extent to provide translated documents to consumers.
A company that provides translated documents must ensure those translations'
accuracy and seek to prioritize communications and activities that most
significantly affect consumers. And a financial institution may wish to use
translated documents provided by the CFPB and other government agencies.
Whatever you do, make sure that you have activated your “change management” procedures and updated your Compliance Management System (“CMS). We can evaluate your Compliance Management System using our CMS Tune-up, so contact us HERE.
According to the CFPB, a company may mitigate fair lending and other risks by implementing a strong CMS that affirmatively codifies how to serve LEP consumers in a compliant manner. You can also develop an LEP-specific CMS or integrate an LEP focus into your company’s broader fair lending, UDAAP, and consumer compliance CMS.
At a minimum, I suggest these procedures to be layered into the implementation process:
Document the Decisions. With respect to providing products and services in non-English languages, document decisions related to the selection of (1) language(s), (2) product(s), and (3) service(s).Chairman & Managing Director
______________________________
[i] “Statement Regarding the Provision of Financial Products and Services to Consumers with Limited English Proficiency,” Bureau of Consumer Financial Protection, 86 FR 6306-6313, January 21, 2021
[ii] 12 C.F.R. § 1005.31(g)(1)(i)
[iii] 12 C.F.R. § 1005.18(b)(9)
[iv] 12 C.F.R. § 1026.24(i)
[v] 12 C.F.R. § 1026.4(e)
[vi] For instance, see Cal. Civ. Code § 1632(b); Or. Rev. Stat. § 86A.198; and Tex. Fin. Code § 341.502(a-1)
