Best Practices for Strengthening Your Fair Lending Program

Fair lending has been at the center of regulatory focus for decades, and in 2025, it remains a cornerstone of consumer protection in the financial services industry. Banks and credit unions are expected to not only comply with the Equal Credit Opportunity Act (ECOA), Fair Housing Act (FHA), and related laws, but also demonstrate proactive efforts to ensure equitable access to credit for all applicants. 

With increasing scrutiny from regulators and heightened awareness among consumers, a strong fair lending program is both a compliance necessity and a business advantage. At Brady Martz, we work with financial institutions to build and enhance programs that stand up to examinations and, more importantly, strengthen community trust. 

Why Fair Lending Programs Matter 

Fair lending laws are designed to prevent discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or other protected characteristics. Regulators continue to issue enforcement actions where institutions fail to monitor their lending practices adequately. Beyond compliance, fair lending programs demonstrate a financial institution’s commitment to serving its entire community equitably. 

Key Best Practices in 2025 

1. Strengthen Governance and Oversight
   Boards of directors and senior leadership must set the tone at the top. Clear policies, strong oversight, and regular reporting ensure fair lending principles are embedded into all aspects of lending.
2. Conduct Regular Risk Assessments
   Annual (or more frequent) risk assessments help institutions identify potential gaps in policies, procedures, and monitoring. Areas such as loan pricing, underwriting, redlining, and marketing should be reviewed to ensure compliance with fair lending expectations.
3. Monitor Lending Data Closely
   With advanced analytics, institutions can identify disparities in approval rates, pricing, or product offerings. Using HMDA data alongside internal data analysis allows for timely detection of potential issues before they trigger regulatory concern.
4. Review Marketing and Outreach Efforts
   Marketing plays a significant role in fair lending risk. Ensure that advertising reaches diverse audiences and does not unintentionally exclude certain communities. Special attention should be paid to digital advertising strategies, which may inadvertently narrow audiences if not properly managed.
5. Train Employees Continuously
   Training should go beyond compliance basics and equip staff with practical tools to recognize and prevent discriminatory practices in day-to-day operations. Tailoring sessions for loan officers, compliance staff, and senior leaders ensures awareness across the organization.
6. Test and Document Compliance Efforts
   Self-testing and mystery shopping programs can help institutions identify weaknesses in customer treatment. Just as important is documenting all compliance activities—policies, training records, monitoring results—to demonstrate diligence during examinations.

Common Pitfalls to Avoid 

• Overreliance on technology without human oversight (AI-driven credit models may introduce bias). 

• Inconsistent application of exceptions or discretionary pricing. 

• Insufficient documentation of decision-making, which weakens defenses during exams. 

Looking Ahead 

In 2025, regulators and consumers alike expect financial institutions to go beyond the minimum requirements of compliance and actively promote fairness and transparency. By strengthening governance, embracing analytics, and fostering a culture of fairness, banks and credit unions can minimize risk while building stronger relationships with their communities. 

At Brady Martz, we partner with financial institutions to evaluate fair lending programs, conduct risk assessments, and provide compliance support tailored to your institution’s needs. With our expertise, you can confidently navigate regulatory expectations while continuing to serve your customers with fairness and integrity.