The Consumer Financial Protection Bureau (Bureau or CFPB) on January 13 issued a Statement Regarding the Provision of Financial Products and Services to Consumers with Limited English Proficiency (Statement), which is intended to provide compliance principles and guidelines to inform and assist financial institutions in their decisionmaking related to serving limited English proficiency (LEP) consumers in non-English languages.
Currently, according to the CFPB, many LEP consumers are not fully integrated into the financial marketplace despite being a significant portion of the US population (approximately 25.5 million individuals). Due to language access issues, LEP consumers face unique challenges in learning about and accessing financial products, services, and education tools; understanding and completing key financial documents; managing bank accounts; and resolving issues with financial products and institutions. For example, financial disclosures and written documents are generally not available in non-English languages.
The first section of the Statement contains guiding principles for serving LEP consumers. These principles consist of the following:
- The Bureau encourages financial institutions to better serve LEP consumers while ensuring compliance with relevant federal, state, and other legal requirements.
- Financial institutions that wish to implement pilot programs or other phased approaches for offering LEP-consumer-focused products can consider doing so consistent with the Statement’s guidelines.
- Financial institutions can consider developing a variety of compliance approaches related to providing products and services to LEP consumers consistent with the Statement’s guidelines.
- Financial institutions can 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.
- Financial institutions may wish to consider extending credit pursuant to a legally compliant special purpose credit program to increase credit access for certain underserved LEP consumers.
The second section of the Statement contains guidelines for developing compliance solutions when serving LEP consumers. The guidelines contain key considerations and [compliance management system (CMS)] guidelines that financial institutions can use to mitigate Equal Credit Opportunity Act (ECOA), unfair, deceptive, or abusive acts or practices (UDAAPs), and other legal risks when making threshold determinations and other decisions related to serving LEP consumers in languages other than English. Key considerations relate to: (i) language selection; (ii) product and service selection; (iii) language preference collection and tracking; and (iv) translated documents. The Statement also provides some generally applicable CMS guidelines regarding components that can be included (or refined if existing) in a financial institution’s CMS to mitigate fair lending and other risks associated with providing products and services in non-English languages.
One particular fair lending issue ripe for innovative solutions is making financial products and services more accessible to consumers who are unbanked and underbanked, including LEP consumers. There are over 350 languages spoken in the United States, which could pose obstacles for financial institutions seeking to fulfill all the credit needs of all consumers in all languages. Of note, the Bureau received feedback through its stakeholder outreach, including its recent ECOA request for information, that indicated that some financial institutions do not have bilingual employees or interpretation services.
Primary concerns noted in the feedback also included: (i) what steps financial institutions can take to avoid fair lending risks under ECOA when making and implementing decisions about language selection for non-English language services; (ii) how financial institutions can avoid UDAAPs, when determining how and in which languages to offer products and services; (iii) whether an inability to offer support in languages other than English, unless specifically required by law, violates ECOA or Regulation B; (iv) whether offering support in a specific non-English language and not in other non-English languages would be considered a UDAAP; and (v) clarification concerning whether collecting consumers’ language preference information violates ECOA or Regulation B.
We anticipate that efforts to promote the integration of LEP consumers into the financial marketplace, among other fair lending priorities and initiatives, will continue under the new administration, while also ensuring LEP consumers are neither harmed nor exploited by discrimination or UDAPs/UDAAPs, which are prohibited by certain federal and state laws, including ECOA and the Dodd-Frank Act. Unlike some other recent CFPB actions, we think that this advice will largely hold up in the incoming Biden administration.