reasonable. There are many instances where consumers simply have no mechanism to avoid injury. For example, consumers typically cannot avoid the harms of discrimination. Regarding the third element – injury outweighed by consumer or competitive benefits – to be unfair, the act or practice must be injurious in its net effects. That means the injury must not outweigh any offsetting consumer or competitive benefits produced by the act or practice. Offsetting consumer or competitive benefits of an act or practice may include lower prices to the consumer or a wider availability of products and services resulting from competition. A discriminatory act or practice is not shielded from the possibility of being unfair, deceptive or abusive even when fair lending laws do not apply to the conduct. For example, not allowing African-American consumers to open deposit accounts, or subjecting African-American consumers to different requirements to open deposit accounts, may be an unfair practice even when ECOA does not apply to this type of transaction. Conclusion Financial institutions directly supervised by the CFPB should treat this exam manual update as a regulation change. They should update their risk assessments, policies, procedures, processes, internal controls, audit processes, staff training, and so forth to incorporate the new application of antidiscrimination standards to areas other than credit. Financial institutions supervised by other federal agencies would be well advised to at least begin to look at this issue since the regulators tend to generally move in the same direction. William J. Showalter, CRCM, CRP, is a Senior Consultant with Young & Associates, Inc. (www.younginc.com), with over 35 years of experience in compliance consulting, advising and assisting financial institutions on consumer compliance and compliance management issues. He also develops and conducts compliance training programs for individual banks and their trade associations and has authored or co-authored numerous compliance publications and articles. Bill can be reached at (330) 678-0524 or wshowalter@younginc.com. www.bccadvisers.com ▪ ▪ ▪ ▪ ▪ ▪ ▪ CONTINUED FROM 13 NEBRASKA INDEPENDENT BANKER 14
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