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Question & Answer
Question: How often can we make exceptions to our loan policy without the exception becoming the policy? We sometimes make special exceptions to policy for customers with a lot of accounts in the bank.
Answer: It is legal to take steps to keep customers. There are several ways you can go about this without stepping afoul of fair lending. One possibility would be to have a policy on customer retention. Include in your lending policy a provision that permits loan officers to take into account the customer's account relationship with the bank and provides some guidance on how to take this into account in loan decisions.
The bank regulatory agencies all agree that the bank may take steps - such as giving favorable terms - to retain valuable customers. So even without a policy, you can provide special loan terms to retain a customer. The rule of thumb should be whether it is better for the bank to offer the terms and keep the overall customer relationship or whether the bank should risk losing the customer relationship by standing firmly behind its established products. This is a judgment call and each case will be different - because each customer has different value to the bank. Using business-related factors is the key - don't let any loan officer think that they can value a male customer more highly than a female customer, for example.
Copyright © 2000 Compliance Action. Originally appeared in Compliance Action, Vol. 5, No. 4, 5/00
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