Legal Blog

Being Proactive with Policies, Procedures and Training

There are certain areas where lenders are always going to be vulnerable, for instance in the area of social media. You can communicate everything with your lenders, and do everything in your power to circumvent mistakes, and still get penalized because there is no way to prevent every negative scenario that could possibly happen—you can’t police the world.

 

Some approach these conundrum by opting to take the position that they are not going to engage in social media, and therefore they are not responsible if and when something happens.  Surprisingly, such a position only leaves lenders vulnerable. Regulators will see the loan officers using social media and not take into account any policy you’ve put into play forbidding it.  If you as a lender are ultimately benefitting from social media, sticking your head in the sand to pretend it is not really happening will not ingratiate you to regulators.  You can’t have a hands off approach…like it or not, if you are making money from social media, you are involved with social media.

 

Thus, embracing – not avoiding – social media is the best practice.  Since it will ultimately be your responsibility to police any social media activity anyway, it’s critical to have policies, procedures and training.

 

Policies and procedures are crucial in taking proactive steps to avoid regulatory backlash when incidents do happen. When no policies are in place and violations take place online, a lender without policies or training has little defense because the view is that the lender did not make any effort to maintain compliant practices. In the absence of proper training and procedural guidelines, regulators believe you don’t care—almost condoning whatever loan officers choose to do, by default.

 

Illustrate you’re actually trying to take measures to prevent harm to consumers, providing structure, rules and training for loan officers to ensure compliance with regulatory requirements.

 

The areas you can’t control are not the ones to dismiss based on the inability to corral everything. There’s an even greater need for policies and procedures surrounding those elusive scenarios because that’s where rogue behavior is more likely to take place.  In those contexts it is even more necessary to be able to illustrate you made a legitimate effort to diminish improper behavior.  Further, training can illustrate what the boundaries are – preventing or at least diminishing rogue or improper behavior online. As such, while policies, procedures and training will only go so far in preventing improper behavior online, having such policies fulfill an important role in demonstrating a company’s legitimate efforts towards compliance.

 

ABOUT ARI KAREN

akaren@offitkurman.com | 240.507.1740

Ari Karen is an experienced litigator and speaker who has focused his practice in representing financial institutions in both government investigations and litigation before state and federal trial and appellate courts nationwide.

Mr. Karen’s practice is diverse, representing clients on matters concerning banking regulations, Dodd Frank financial reform laws, contractual disputes, employment and labor statutes, wage-hour class actions, employment discrimination and fair lending matters, whistleblower complaints and non-competition claims, among others.

 

 

 

 

 

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