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Data & Analytics, Change Management, Compliance

1 minute read

Remediating Customer Impacts Under the Military Lending Act

May 6, 2021

Written by: Spinnaker Team

The Big Picture

Regulations might be written in black and white, but how they are interpreted is up to bank leadership. In the case of a Top 30 bank, its interpretation of the Military Lending Act meant that it could not allow active military members in collections to pay by remotely created checks (RCCs). However, ongoing operations monitoring revealed that a third-party supplier, intended to help take online payments, was at times generating checks that were out of compliance.

The Spinnaker Approach

Spinnaker was asked to provide a solution to not only bring this process into full compliance but to remediate any customer impacts. After digging into the issue and closing operational gaps to ensure the bank was delivering on intent, we then worked with the bank’s legal and compliance teams on a plan to issue refunds to customers on payments that now would be considered out of compliance with its updated policies.

Our data-driven approach identified and executed a sustainable solution that validates customers are covered borrowers, as defined by the MLA, and are eligible to use RCCs. We then used data analytics in identifying impacted customers who previously should not have been allowed to use RCCs and helped the bank issue refunds.

The Client Benefits

Spinnaker helped bring the bank into MLA compliance with their most recent interpretation, supporting practices that protect active military members from unfair lending practices. Leveraging our analytics capabilities and tapping into the bank’s internal resources, we helped the client fine-tune their impact analysis, which eliminated costly refunds to nonaffected customers and reduced the bank’s potential payment by about $10 million.

Read our Customer Remediation case study to find out how Spinnaker helped our banking client comply with its updated interpretation of the Military Lending Act, as well as remediate the impact of prior actions on customers.