The Importance of Product & Service Training To Enhance Fair Lending Compliance

Fair Lending  »  The Importance of Product & Service Training To Enhance Fair Lending Compliance

In previous posts we have emphasized the importance of customer service as an aspect of managing fair lending risk. Since fair lending deals primarily with treatment of applicants, and the agencies recognize that discrimination can take place at any aspect of the transaction, inconsistency in levels of service could constitute fair lending risk. Consequently, having good customer service that is consistent among all staff is an important piece of risk management. 

Customer Service

Good customer service can reduce the likelihood of formal complaints which could trigger an unexpected fair lending inquiry. This risk is greatly reduced within an atmosphere that produces a quality service culture. (Incidentally, the most current issue of the Fed’s Compliance Outlook points out the importance of service in compliance training programs on page 4.) How people are treated can go a long way in the way they judge their experiences, even if the outcomes they receive are not exactly what they are looking for. 

Product Training

Another often overlooked aspect of fair lending and compliance training is knowledge of products and services offered. Again, thinking of it from the standpoint of consistency, unless staff have a complete and thorough working knowledge of all the products and services the institution offers, and the benefits of each, it will be difficult to maintain consistent treatment. It is frequently the case as well when things change (either based on a regulatory directive or by management choice), these are not always communicated or are done so in an inaccurate or incomplete fashion. This can create inadvertent inconsistencies which increase risk. 

It is, therefore, critical to have ongoing training and, for larger institutions in particular, some testing to verify the effectiveness of training and staff knowledge. Without some type of measurement, it is difficult to assess otherwise.  

Keep it Simple

There is also power in simplicity. Often institutions can get very creative in product offerings and features in an effort to compete. As a general rule, the more complex a product is, whether it is in regard to qualification requirements or terms and conditions, it is more likely to change over time. It is these changes that often fall through the cracks and create issues with consistency.  

Complexity can also make it more difficult at exam time to explain to examiners the products and also the attributes that were relevant during certain time periods. Although seemingly trivial, this is a point that should be considered with every new product or product change. Examiners may want to know not only the details but how staff know such details and how they are consistently explained and offered to all customers.  

Steering Implications

Knowledge of products and services can not only affect consistency or treatment but could also increase the risk of “steering” aspects of fair lending compliance. Certain staff members may be unaware or don’t have a thorough understanding of products, which could increase the risk of steering. As noted above, this is especially the case when product offerings are unnecessarily complex.  

The Value of Personal Training

With technology advances and the wide availability of online and video training opportunities, there is often very little face-to-face, interactive training conducted today. Although it is difficult to justify not using the speed and convenience of tech from an efficiency standpoint, there are some advantages to at least mixing in some hands-on- sessions. This is particularly true with regard to fair lending for a number of reasons. 

First, often in an interactive setting much information can be gleaned from lending staff as to what is actually being done “on the ground.” Many times, corporate staff, compliance and particularly management are frequently not completely in touch with the daily front line operations. It has been discovered in many such sessions that, what management/compliance thought was being done was not actually being done. Or, that there were differences in interpretation and application of certain practices.

Second, front line staff many times are facing challenges that have made things more difficult for them of which corporate may be unaware. These, in turn, could translate to issues with regard to treatment of customers. Identifying them during a training session could prevent future issues. 

One final benefit of interactive training is with regard to how material is presented. Fair lending is a sensitive area for many people and one that can bring some discomfort. This is seldom recognized but, nevertheless, is true. Staff also often have different perspectives on this issue. While some may be eager to learn and want to comply with the law and bank policy, others may feel similarly but may feel they are being accused or criticized as if they are doing something wrong. 

Bringing this back around to the beginning of this article, a way to relate this to something everyone can understand and get onboard with is to approach it from a service perspective. Fair lending should be about treatment – treating customers as one would  want themselves or their family members to be treated. Although the application of fair lending regulations by the agencies is more complicated than that and far less forgiving, from a training perspective, the theory holds. Obviously training must include the types of discrimination, an overview of fair lending laws, areas of risk, and that inadvertent actions are subject to the same principles.  Approaching it from a positive perspective and integrating the service and product training may go a long way in both reducing risk and keeping staff engaged and onboard with the institution’s policy. 

How to cite this blog post (APA Style): 
Premier Insights. (2019, May 14). The Importance of Product & Service Training To Enhance Fair Lending Compliance [Blog post]. Retrieved from

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