Our Sr. lending officer would like to offer a better rate to customers of a home builder for loans over say $250M, can we do this. We do not pay the builder for anything, he simply referrs the cust to us. We usually would not do 25 year loans, but our lender would like to do this just for this contractor. I said we would have to offer this to others who quality too. Also, can we offer different ila rates to match or beat the competition if the customer asks? Or do we have to stick to our regular ila rates?

Kari, you can implement preferential pricing programs for a particular group of customers (those referred by this builder, for example). However, there are risks associated with that. You will want study the potential effect of providing preferential pricing to this group of customers. Will there be a disparate impact on a protected class of customers? What is the business purpose for doing this? Is the potential reqard worth the risk? You will want to build special monitoring procedures to determine whether any protected classes are being harmed by the process.

The same would hold true for departing from established rates for instalment loans to match the competition. Is a protected class adversely affected by this practice? How will you measure that?

Differential pricing is not discriminatory per se. But you do need to take extra steps that the price differences are not applied in a discriminatory fashion.