Consider what groups are particularly vulnerable to improper marketing or sales pitches, or might not be able (for whatever reason) to effectively choose the best option that your bank has to offer for them.
understanding, catastrophic life event, general
financial distress, or just lack of caring. But in
any event, it’s a classification to pay attention to.
Active-duty servicemembers.
Another obvious category for clear reputation
risk reasons, if nothing else. The simple fact
is that these consumers have quite enough on
their minds to worry about without also having
to avoid being taken advantage of by their bank.
Unbanked or underserved.
Similar to younger consumers, these are consumers with little or no experience with the financial system or its many products or services.
How can you know what is unfair or abusive if
you don’t know the landscape?
Certain disabilities.
Some disabilities, such as blindness or deafness,
make it more of a challenge to process information. Consequently, the risk of deception or
abuse increases.
So what to do about these groups? A full set
of UDAAP recommendations would take many
pages, but here are a few quick pointers to keep
in mind when dealing with vulnerable classes:
Look at your product development process.
If a product is designed with a vulnerable class
in mind, UDAAP risk is inherently higher. Does
this mean it’s an enforcement action waiting to
happen? Not necessarily, but you better make
sure the product’s terms and conditions (and
costs) aren’t more onerous than similar prod-
ucts designed for a more general population.
ABOUT THE AUTHOR
CARL G. PRY, CRCM, CRP, is a senior
director for Treliant Risk Advisors in
Washington, D.C., where he advises
clients on a wide variety of
compliance, fair lending, corporate
treasury, and risk management issues. Over the last
18 years, Pry has held senior leadership positions
including senior vice president and compliance
manager for the Compliance and Control
Department at KeyBank in Cleveland, Ohio; vice
president of regulatory services at Kirchman
Corporation in Orlando, Fla.; and manager in the
Finance and Performance Management Service
Line at Accenture in Chicago, Ill. He also serves on
the ABA Bank Compliance editorial advisory board.
Reach him via email at cpry@treliant.com or by
telephone at (440) 320-4662.
