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Guidelines for Serving Limited English Proficiency Consumers Emphasize Expectations and Risks for Financial Institutions

Germaal RossGermaal Ross, Director Risk and Compliance
John ConwayJohn Conway, Senior Manager Senior Manager

On January 13, 2021, the Consumer Financial Protection Bureau (CFPB) published a Statement Regarding the Provision of Financial Products and Services to Consumers with Limited English Proficiency (LEP). The statement is intended to provide principled guidelines to assist financial institutions when offering or expanding products and services to LEP consumers. The statement expands on observations from the CFPB’s Fall 2016 Supervisory Highlights by providing financial institutions with additional considerations to address unfair, deceptive, or abusive acts or practices and fair lending risks, as well as legal uncertainties associated with expanding products and services to LEP consumers.

At its core, the CFPB’s considerations and guidelines are consistent with oft-repeated and highlighted messages regarding effective compliance, risk and change management.

Guiding Principles

The following guiding principles are provided in the statement:

  • Serve LEP consumers, but do so compliantly, considering relevant federal, state and other legal requirements.
  • Just as with a Compliance Management System (CMS), the compliance approach related to products and services for LEP consumers should vary based upon the size, complexity and risk profile of the financial institution.
  • Consider using compliant special purpose credit programs (SPCP) that increase access to credit for LEP consumers who have been economically disadvantaged, and have as a class experienced limited access to the credit markets.
  • Consider using phased approaches such as pilot programs for products and services for LEP consumers.
  • Provide clear and timely disclosures to LEP consumers in their respective languages in order for consumers to make informed decisions. Such disclosures should address the institution’s ability to service products in that language throughout a product’s lifecycle.

Additional Considerations

While it recognizes the challenges financial institutions face serving LEP consumers, the CFPB adds that those challenges are not insurmountable. The Bureau provides key considerations and CMS guidelines that institutions should incorporate when managing legal risks and making threshold decisions related to serving LEP consumers in languages other than English.

The rationales behind product offering decisions for LEP consumers and selecting which, or whether, documents should be translated should be clearly supported and documented, according to the guidance. In order to support some of these rationales, the CFPB clarified legal uncertainties on how financial institutions may collect and leverage consumer language preference data. For instance, financial institutions should consider U.S. Census Bureau demographic or language data to assist in the selection of an appropriate language preference to apply to product offerings and communications for LEP consumers.

The CFPB also clarified that collecting consumer language preference data from customers does not violate the Equal Credit Opportunity Act (ECOA) or Regulation B. However, financial institutions should closely monitor how this information is used at the institution to ensure compliance with all applicable laws and regulations.

What Financial Institutions Should Do

Financial institutions are encouraged to use the statement as a roadmap for serving LEP consumers. The guidelines do not require the provision of products or services or prescribe requirements for serving LEP consumers. However, institutions that serve LEP consumers must determine and dedicate the necessary resources required to address the compliance, legal and operational considerations.

The current environment of limited in-person interaction increases the need for institutions to have scalable resources to meet LEP customer needs. For institutions already providing services and products to LEP consumers, knowingly or unknowingly, consideration must be given to assess whether they are equally meeting the needs of English-proficient and LEP consumers throughout the entire lifecycle of the relationship. Limited in-person interaction also requires more comprehensive and innovative approaches to outreach and customer acquisition.

The statement provides guidance on how to mitigate the compliance risks associated with an institution’s decision-making process, most of which is best housed within the concept of a LEP-focused compliance program. Institutions should consider whether to develop an LEP-specific CMS or integrate LEP into an existing CMS in order to comply with relevant laws, rules and regulations.

Due to the close relationship between LEP consumers and protected classes, fair lending laws and prevention of unfair, deceptive or abusive acts or practices are of heightened importance. Financial institutions should not read the statement as anything less than an affirmation that serving LEP consumers is encouraged, but doing so fairly, legally and compliantly is expected. Not doing so may result in missed opportunities to serve a growing, underserved population or subject an institution to scrutiny for its practices or lack thereof in serving its LEP customers as compared to those who are English proficient.

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