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9 Fair Lending Compliance Training Essentials [Free Checklist]

4 min read
Feb 23, 2017

Training is a critical part of any fair lending compliance management program. Here are nine essentials your Fair Lending compliance program needs to include, plus a free checklist to help others in your team manage the associated risks.

Every institution that complies with fair lending - whether a bank, credit union, mortgage company, auto lender, or alternative payment provider - is expected to provide Fair Lending training. It's a critical part of the compliance management program (CMP), as training is one of the most direct ways to convey the importance of compliance and help educate employees on how to prevent and manage risks.

In this post, we will cover the nine essentials of any strong Fair Lending compliance training program:

1. Choose How to Provide and Deliver Training

When considering how to build and implement a fair lending training program, you'll need to decide whether to purchase training modules from a consultant or a training company, or produce them internally.

There are benefits to both. Producing training internally lets you leverage internal expertise about the nuances of your company, and sometimes it provides cost-savings. Outsourcing training provides access to industry-tested expertise, and the collective intelligence of another group of compliance pros. However, sometimes it is more costly.

There are also a few options for delivering training. You may opt to provide online or in-person training, delivered either by an internal employee or a consultant. If you hire a consultant or a company to provide training, the delivery and guidance is frequently part of that agreement.

This training needs to map to the risks present in your institution. If your company outsources loan servicing, there is no reason to spend much time on that in your general or role-specific training. Alternately, if you have a unique business model or high risk, make sure that your training helps address risk exposure.

2. Offer General Fair Lending Training

Institutions that have to comply with fair lending need to offer annual fair lending training. At a minimum, offer general training to all employees involved in the lending or crediting process, in order to help educate them on how to identify and reduce risks.

Many institutions choose to provide general training to all employees. The smaller companies that have people in multiple roles will certainly need the training.

With Fair Banking issues, it is sometimes better to give everyone some basis of understanding. This is especially true for other areas of compliance, such as UDAAP and Reg. B. (Look for more on this in the future.)

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3. Offer BOD-Specific Fair Lending Training

Training programs should include Board of Director- and Senior Management-specific training. These individuals have unique compliance responsibilities - and unique liabilities. (In some instances, the leadership of financial institutions have been held personally responsible for compliance violations.)

It's also important that senior management and the BOD receive training because they help set the tone for the rest of the company. If they are investing in compliance, it will improve the compliance culture of the organization as a whole.

4. Offer Role-Specific Fair Lending Training

It's important to provide targeted, role-specific Fair Lending training to individuals based on their involvement in specific phases of the crediting or lending process. This training is valuable for lenders, loan assistants, collections, processors, closers, underwriters, and more. There are unique risks in underwriting, pricing, steering, etc., and training can help educate employees on them.

5. Track Attendance

Strong Fair Lending training programs incorporate a process for tracking individual attendance. These attendance records need to include: training dates, topic plus a description of what was covered, individual attendance record, and the date of make-up training for those who may have missed the original session.

6. Assess Individual Performance and/or Comprehension

In addition to attendance tracking, strong training programs also have a way to assess individual performance or comprehension. This may include a comprehension test during or after the training and a defined passing score.

7. Include a Method for Reporting to Management

As with other areas of compliance, reporting is an important component. Management and the Board should be kept apprised of training schedules, attendance and comprehension test results. Much of the responsibility for Fair Lending compliance falls to them, so it's important that they be aware of the status of training at the company.

8. Determine Repercussions for Missing or Failing Training

Many Fair Lending training programs include consequences for individuals who fail to take or pass training. This may mean remedial sessions, or additional time spent on Fair Lending compliance lessons, or other requirements. Some also consider ways to reward employees who complete or pass training. 

9. Create and Maintain Written Training Policies

It's important to document the processes and guidelines for training in written company policies. Policies should touch on the previous eight elements, and be updated whenever the training program changes. It's a good idea to review written policies annually to ensure that they are up-to-date.

These nine elements are essential to any strong fair lending training program. No matter your industry, size or risk profile, these 9 basics will help ensure that your company's training is adequate to meet the regulatory expectations and reduce fair lending risk. 

As your training program gets more sophisticated, consider ways to develop consumer compliance training modules that support each other. With complimentary training, all the disparate pieces of compliance can begin to fit together more clearly for your employees. One good example is fair lending training that touches on CRA, or UDAAP, and vice-versa.

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