Fairness

Fairness and potential breaches to customer trust will be driven through:

Supervision and Enforcement: Fairness will continue to be examined throughout the  customer journey and across products and services (e.g., auto loans, servicing, payments,  deposits, advertising, sales, and data and privacy practices), as well as underlying decision-  making processes, including the use of “automated systems” (e.g., models, algorithms,  programs, AI/ML) and related marketing/advertising. Fairness should also be factored into  a firm’s operations through dynamic and ongoing risk assessment processes, monitoring,  testing and data analyses.

Regulatory Expansion: Despite potential court challenges on regulatory authority, regulators  will continue to apply an expanded lens of fairness to existing regulations (e.g., UDAAP/  UDAP). Expect revisions to existing regulations and guidance (e.g., CRA, merger and antitrust  reviews, and conflicts of interest) and new regulations to include fairness considerations.

And while legal challenges could potentially extend implementation timelines for certain new  rules and proposals (e.g., CFPB’s 1071 small business lending rule), regulators will expect the  industry to continue preparedness and implementation planning.

• Market Structure Changes: Anticipated changes to the retail trading market structure  aim to reduce “inefficiencies” that may disproportionately impact retail investors. The  changes promote transparency and market competition through new Best Execution  standards, expanded order execution disclosure, “improvements” to certain pricing and  fees, and increased order competition.
• Fair Treatment: Regulatory focus on complaints, claims, and fraud management,  with particular focus around timeliness, substance, and completeness of responses  will be ongoing. Regulators will look for consistency between consumer groups and  responsive/fair remediation of disputes.

• Clarity: Continued regulatory focus on the clarity, completeness, accuracy, and consistency of  statements and claims made regarding products and services in related marketing, advertising,  and disclosures.
• Supervision: Continued scrutiny to evaluate whether:
  • Products and services are offered on substantially the same terms to all consumers/investors  and are not designed to favor one group over another.
  • Analyses are conducted to identify potential discriminatory outcomes and/or conflicts of  interest related to a product or service (including those offered through third or fourth parties,  and especially where automated systems are being used,) and steps are taken to mitigate  that risk.
  • The “reasonableness” of certain fees or material statements of fact can be substantiated  (e.g., “tangible benefit” to the consumer or investor).
  • Investigations of complaints are “reasonable” and pursue timely resolutions.
• Fraud: Continued regulatory focus on fraud, identity theft, and other scams (e.g., crypto- or  payment-related scams) as costs to consumers and consumer complaints increase. Areas of  regulatory focus will include:
  • Fraud models, operations/errors, and investigations processes.
  • Insider misconduct and corruption.
  • Consumer protection laws and regulations; consumer complaints, claims, disputes, and  account/transaction freezes.
  • Cybersecurity risk management (including synthetic identity fraud).