On September 17, I had the opportunity to speak on a panel at the American Bar Association’s Consumer Financial Services Committee meeting in Chicago (which was held as a part of the ABA Business Law Section Annual Meeting), covering the topic of how financial institutions can serve consumers with limited English proficiency (LEP). I was joined on the panel by representatives from the CFPB (Frank Vespa-Papaleo from the Office of Fair Lending), consumer advocacy groups, and financial institutions.
The topic produced a fascinating, but ultimately very unclear, discussion, and revealed the numerous quandaries that financial institutions face when trying to serve LEP consumers. Here are just a few of them:
- In the past, there has been regulatory enforcement activity based on the idea that if a financial institution markets or originates a product in a non-English language, it must then service all aspects of that product in that language. This would suggest to financial institutions that they should carefully avoid marketing or originating products in any language other than English, but the CFPB and other regulators appear to want financial institutions to make credit more available to LEP communities by marketing and originating in non-English languages. Unless lenders are prepared to offer the entire servicing experience (including interactions with service providers) in a non-English language, however, complying with the CFPB’s goals in this area could create enforcement exposure.
- There is also a strong tension between the regulatory desire to communicate in non-English languages and UDAAP issues. As readers of this blog know, it is difficult enough to ensure that communications to consumers in English are clear and understandable. If phone scripts, letters, disclosures and other documents are translated into another language, they may not be as clear or understandable to non-English speakers, because some concepts (especially legal concepts, or words used in particular U.S. laws or regulations) may get “lost in translation.” But if financial institutions volunteer to translate such documents, they may face UDAAP liability if the translations are later alleged to be incomplete or unclear to non-English speakers. The CFPB is offering translations of some documents it creates (for example, the Home Buying Information Booklet, announced on September 21, 2015), but in the absence of “official” translations of other documents, financial institutions are left to guess if their translations will be viewed as adequate.
- It is also impossible, as a practical matter, for financial institutions to transition all communications and all products into another language simultaneously. If institutions adopt a phased approach, converting certain products or certain “most critical” communications to a non-English language first, they are subject to attack based on claims of “steering” LEP consumers into certain products, or failing to translate a document that a regulator later decides should have been made available from the outset.
I believe that the historical enforcement activity in this area, coupled with the CFPB’s very aggressive focus on fair lending issues, is inhibiting progress in making financial products available to LEP consumers. To relieve the paralysis that the current regulatory environment is creating, the CFPB should establish a road map that gives financial institutions guidance about how to serve LEP consumers without taking the UDAAP and fair lending risks discussed above (in addition to many others). The Bureau’s guidance could promote progress in this area by establishing guidelines for what documents should be translated first; by prescribing an acceptable transition period in which not all portions of a consumer’s experience would have to be in a non-English language; and by pledging that the Bureau will not pursue enforcement actions for UDAAP or fair lending issues based on partially-transitioned products or translations using a particular method. The status quo, however, in which the Bureau expects financial institutions to try to make difficult and risky judgment calls in the face of seemingly contradictory regulatory commandments, is not only unfair to financial institutions, but unfair to LEP consumers, whose access to financial services is being diminished because of the fear of regulatory enforcement.