The federal agency charged with consumer financial protection is “sharpening its focus” on digital redlining and algorithmic bias amid the growing influence of technology platforms, including big tech firms, in the financial services marketplace, the agency said in a report Friday.
This comment about the intentions of the Consumer Financial Protection Bureau (CFPB) is found in the conclusion provided in the approximately 40-page fair lending report covering the bureau’s 2021 activities.
“As more technology platforms, including Big Tech firms, influence the financial services marketplace, the CFPB will be working to identify emerging risks and to develop appropriate policy response,” the report states.
In a section of the report addressing regulatory activity, the bureau reminded that it is participating in interagency rulemaking processes with the Federal Reserve Board, Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corp. (FDIC), National Credit Union Administration (NCUA), and Federal Housing Finance Agency (FHFA) to develop regulations to implement the amendments made by the Dodd-Frank Act to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) concerning automated valuation models.
“To address potential fair lending risk in models, the CFPB is considering proposing a requirement that covered institutions establish policies, practices, procedures, and control systems to ensure that their AVMs comply with applicable nondiscrimination laws,” it states.