We are updating our loan pricing policy/guidelines. We are interesting in knowing what, if any, impact fair lending considerations might have on pricing and if we should be tracking them. Please advise. Thank you.

IMHO - The pricing poicy could/should have specific measureable and definitive caviets for any variences.

Define "Good Loan Customer" potentially as one who has had a loan at least xx% of the credit requested and paid as agreed". If you say "Loan Customer", that could be someone with a 10 year old $5,000 visa credit card that is unused.

Instead of saying Long Term Relationship, (which could reflect opening a savings account 10 years ago with $100, and nothing else) come up with a criteria potentially for Good Bank Customer "deposit and loan accounts, maintained as agreed for xx% of the credit requested."

etc.

For matching competitors, a copy of their GFE would be mandatory to match their rate.

In all cases, you would need to apply the SAME standards to ALL applicants. (Including potentially asking all applicants if they have inquired about other rates.) Any deviations should be limited, approved, recorded, reviewed, reported and analyzed.

To Rocky's list, I would add things like

• limits on the amounts, frequencies, and approval authorities for pricing exceptions;
• Definitions of "wealth" customer
• Requirements for ongoing monitoring and reporting of exception numbers and amounts by the first line
• Capturing (preferably electronically) the reason for any pricing exceptions
• Required documentation for pricing exception approval
• Whether exception requests are granted or denied

In addition, second line compliance and third line audit should include exceptions in their monitoring, testing, and audit to ensure fair lending risk is within risk appetite.

Pricing for consumer loans or commercial loans?

Consumer loans are easier to manage and the advice already provided is good. But commercial lending is different and many factors are considered when pricing commercial loans. Regardless, it's important to monitor exceptions with a formal process so you can determine if similarly situated applicants are being treated the same.