Upstart’s Commitment to Fair Lending

Last week, Upstart submitted a letter to the Consumer Financial Protection Bureau asking to shorten the term of Upstart’s No Action Letter which was originally signed in 2017 and renewed in 2020. Today the Bureau granted that request. Our request was motivated by a need to keep our risk models accurate and up-to-date during a period of significant economic change.

Upstart’s decision also comes in the context of changing priorities at the Bureau. Last month, the Consumer Financial Protection Bureau (CFPB) announced they are replacing the current Office of Innovation with the new Office of Competition and Innovation. The new Office will work to “identify obstacles for new market entrants” and will support “the CFPB’s general effort at increasing competition for the benefit of all consumers.” 

As part of this change, the CFPB indicated that the Office will de-emphasize regulatory arrangements with individual companies, including the no-action letter (NAL) program launched under the Bureau’s first Director, Richard Cordray. In light of this, the Bureau has approved Upstart’s request to wind down participation in the CFPB’s NAL program. 

As a longtime CFPB NAL program participant, we appreciate the time, attention and thought devoted by the Bureau’s staff to the Upstart NAL over the past six years. We designed our fair lending program to meet or exceed the CFPB’s high standards for compliance under the Equal Credit Opportunity Act (ECOA). The process and rigor has made us a better company.

Upstart is already in contact with the CFPB’s new Office of Competition and Innovation and will continue to pursue a transparent and cooperative relationship with the CFPB and other financial regulators in support of our inclusive mission. We will also continue to rigorously test every loan application for fairness, including pre-testing every model update prior to implementation.

Effective cooperation between the government and financial technology innovators remains critical to improving financial access for the millions of borrowers left behind by America’s current credit system.

“We built our fair lending program over the last six years to exceed the CFPB’s high standards for compliance under the Equal Credit Opportunity Act. We appreciate the time, attention and thought devoted by the Bureau’s staff to the Upstart NAL in helping us refine our fair lending practices – the process has made us a better company. 

“Upstart will continue to pursue a transparent and cooperative relationship with the Bureau and other financial regulators in support of our inclusive mission. We will also continue to rigorously test each and every application and loan for fairness, including pre-testing every model update prior to implementation. Effective cooperation between government and financial technology innovators is critical to improving financial access for the millions of borrowers left behind by America’s current credit system.”

— Nat Hoopes, Vice President and Head of Public Policy and Regulatory Affairs at Upstart

June 8, 2022

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