---
title: The Difficulty of UDAAP
description: What You Need to Know About UDAAP.  Speaker - Inconsistent interpretations and then inconsistent applications of what should be done.
---

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# [The Difficulty of UDAAP](https://blog.bankerscompliance.com/en/the-difficulty-of-udaap)

 Written by [Jerod Moyer](https://blog.bankerscompliance.com/en/author/jerod-moyer) | Dec 1, 2022 6:36:58 PM

It’s not uncommon that when someone utters the term UDAAP (Unfair, Deceptive, and Abusive Acts and Practices), many bankers shudder.

## Why is that?

It’s safe to say that most financial institutions have the best interests of their customers at heart and have no intention of being unfair, deceptive, or abusive in any way.

> Even the best intentions, however, can be misinterpreted since UDAAP is so subjective and is often in the eye of the beholder (or examiner) in most cases.

Jerod explains more in the video.

 

#### Transcript:

[UDAAP](https://www.consumerfinance.gov/compliance/supervision-examinations/unfair-deceptive-or-abusive-acts-or-practices-udaaps-examination-procedures/)'s not easy because there's a lot of subjective stuff. And so we'll start with that gray area's comment. Inherently, when it comes to the financial industry, we like regulations. I know nobody wants to believe that, but here's the deal. When we have regulations that are black and white, that say go this far, stop here, do this, don't do that, we feel comfortable, and we know how far we can go. We know where we need to stop, what we're to do, and what we're not to do. It's when the regulation is nonexistent, or it stops short of telling us what to do and what not to do and leaves things to the imagination, letter B, the subjective nature of certain things in certain instances, that [UADAP](https://www.fdic.gov/resources/bankers/consumer-compliance/unfair-deceptive-abusive-acts-practices/) risk presents itself.

And what it does present itself, the letter C, is what ends up happening. There ends up being inconsistent interpretations and then inconsistent applications of what should be done and what shouldn't be done in those areas. Some examples more recently would be overdrafts. And still to this day, even though they've done some work on it, mortgage servicing, we've got some rules, but there were a lot of gray areas where things were left to the imagination. And so when those gray areas, when the regulations stop short or are non-existent, that's where you're going to find the majority of the UDAAP risk.

Published  
2022/12/01

[View full post](https://blog.bankerscompliance.com/en/the-difficulty-of-udaap)

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