Pub. 5 2015-2016 Issue 2

14 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S FEATURE ARTICLE Don’t forget a part of ECOA is also the Notice of Action Taken, commonly referred to Adverse Action Notice. DARLIA FOGARTY DIRECTOR OF COMPLIANCE COMPLIANCE ALLIANCE Consumer Compliance Applies to Commercial Credit? W hen your Compliance Off icer in- forms you that Loan Officers who only work with the bank’s commer- cial portfolio should be trained on consumer compliance, it is not a joke. We hear complaints from Loan Officers on a daily basis about the Compliance Officer insisting they at- tend consumer compliance trainings. Whether that be webinars or online training, we agree. Let’s talk about the reasoning behind this recommendation. While the group of the reg- ulations, consumer compliance or consumer protections and even the name of the new government agency, Consumer Financial Pro- tection Bureau, understandably would lead a reasonable person to believe these regulations would only apply to consumers, there are a group of these regulations that extend their protection to commercial customers. Thus making it imperative for the commercial loan officers to not only know the regulations exist, but to also understand how the regulations apply to the commercial customers. That being said which regulations extend protection to commercial products and ser- vices? The best place to start is always at the beginning. In the beginning, banks determine the credit needs of their communities. The Com- munity Reinvestment Act (“CRA”), which is Regulation BB, requires that determination to be strategically planned and executed. CRA requires large banks to collect and report their CRA small business and small farm lending activities. While this leaves the smaller banks breathing a sigh of relief, you may want to familiarize (train) the bank’s staff with the reporting requirements, especially in this time of mergers and acquisitions, because it is within the realm of possibility that your bank could go from the Intermediate-Small size bank, for CRA purposes, to a large bank rather quickly. Next we will move on to a regulation that will affect your bank, no matter what the asset size is. The first one that comes to mind is Equal Credit Opportunity Act (“ECOA/Regu- lation B”). This regulation prohibits the bank from discriminating on a prohibited basis in any aspect of a credit transaction (loan). Those prohibited basis include race, color, religion, national origin, sex, marital status or age. These protections apply to all consumers as well as commercial transactions. Don’t forget a part of ECOA is also the Notice of Action Taken, commonly referred to Adverse Action Notice. This requirement is a little different for commercial customers vs consumers, but it still applies. Also, I would be remiss if I didn’t also state that the record retention for commercial customers, under the ECOA requirements, is also a little different vs the consumer customer requirement. Commercial credit is to be re- tained 12 months after the customer is made aware of the action taken, consumer customers is 25months. The difference between commer- cial vs consumer are reasons to require your commercial officers to have training for ECOA. Another regulation that applies across business lines is the Flood Disaster Protection (“FDPA” - Regulation H). The FDPAmandates that banks cannot make, increase, extend or