Americans for Financial Reform, in collaboration with other agencies, have released a report urging the Consumer Financial Protection Bureau to take stock of its responsibilities to borrowers with limited English language proficiency by providing complimentary interpreting services upon request.
The group highlights a growing problem of unscrupulous banks tailoring complex financial products to client demographics who do not speak English, while neglecting to provide the necessary loan terms in languages that the borrowing clients would be able to understand.
The report states that “Typically, once LEP [Limited English Proficient] consumers are sold the product, they receive complicated information regarding all of the important terms in English.” This highly unsatisfactory situation is often compounded by the fact that many clients turn to their offspring to translate “legal terms and other highly specialized terminology” in the paperwork and financial documentation surrounding mortgage terms.
The definition of an LEP is one who is over five years of age and who self-identifies speaking English less than ‘very well’.
“It is deeply concerning that consumers and borrowers are resorting to their relatives’ help when it comes to understanding the often complex terms underlying the financial products they are being sold and financial service providers are not as a matter of course considering whether a customer will understand their legal obligations” said Arun Chauhan, solicitor and principal of Tenet Compliance & Litigation Litigation and consultant on financial crime legal compliance at Today Translations. “Clearly more needs to be done to convince banks to identify where there is need to communicate in the customer’s language.”
Working Within the Law
However, the daunting task of accommodating all of this growing group’s language and translation needs is made easier by a relatively narrow distribution of origin and language within them. A large majority of all LEPs speak one of just eight languages – Spanish, Chinese, Vietnamese, Korean, Tagalog Russian, Arabic and Haitian Creole. Moreover, a full two thirds of LEPs have Spanish as their preferred language. The fact that an enormous majority can be accessed with such a small language set means that the translation and interpreting recommendations of Americans for Financial Reform, although formidable at first sight, are in fact quite manageable.
AFP argue that there is a judicial incentive to cater to the linguistic needs of foreign clients; they posit that failure to accommodate for loan-taking LEPs may leave lenders in breach of numerous federal regulations. For instance, inaccessible loan terms could entail a violation of the Equal Credit Opportunity Act, or alternatively could entail liability under sections of the Fair Housing Act and the Civil Rights Act of 1964.
In order to remedy the situation, the AFR provides with their report a list on recommendations for regulators and other industry leaders aimed at making the current system fairer and more transparent.
Key among these is the suggested consolidation of a requirement for lenders to provide oral interpretation free of charge upon request, as well as being willing to make any file in an agreement available in the borrower’s mother tongue. Other key mortgage documents that apply to all transactions as a matter of course should be offered from the off ‘in a reasonable number of preferred languages.
“The best way for banks to communicate to LEP clients would be to source translators and interpreters with the necessary subject matter and terminology expertise to ensure clients can explain what they need and understand what they are buying,” according to Arun Chauhan. “These steps would protect consumers and mitigate the risks associated with not understanding legal obligations and also protect the bank from inadvertent claims of misselling”.
In addition, the report claims it is imperative that consumer complaint services should be accessible to these at-risk customers – both from a compliance and an ethical lending standpoint.
“The mortgage market is a crucial part of the national economy as well as a key building block of wealth in communities and enhancing access for LEP homeowners would support the growth of the housing sector and of LEP market participation.”