New framework offers actionable guidance for lending compliance, model governance, and consumer protection
The Coalition for Financial Ecosystem Standards (CFES), an industry-led organization that sets audit-ready standards that promote safety and soundness within bank partnerships, today announced the release of its Lending Module accompanied with a Lending Checklist, establishing clear expectations for compliance, risk management, and model governance across the lending ecosystem. The Lending Standards and Checklists within the module bring needed clarity to bank–fintech partnerships at a moment of rapid technological change and shifting regulatory posture, reinforcing the importance of consistent, industry-driven guardrails.
Developed alongside industry leaders such as FairPlay and Upstart, the Lending Standards translate complex lending regulations into actionable frameworks across seven critical areas, from fair lending programs to model risk management, giving organizations clear guidance on implementing compliance requirements in practice. By establishing consistent assessment criteria for lending operations, they create shared understanding between bank partners and nonbank lenders on what constitutes effective risk management and regulatory compliance in lending partnerships. And, as AI and machine learning reshape credit decisioning, they provide dedicated guidance on model risk management, validation processes, and governance frameworks that address the unique challenges of technology-driven lending.
“At a moment when supervisory approaches are evolving, clarity has never been more important,” said Sima Gandhi, Co-Founder of CFES. “These standards provide banks and fintechs a shared foundation for managing lending risk and consumer protection, particularly as AI becomes central to credit decisions. This is an industry-led blueprint designed to create consistency and accountability that endures across regulatory cycles.”
The release of these standards comes at a critical moment for the industry. Recent regulatory shifts, including reductions in fair lending supervision, make proactive self-regulation essential to ensure clarity and consistency beyond any single administration. At the same time, AI and automated technologies are evolving faster than regulation, requiring industry-developed best practices so innovation can advance safely without waiting years for regulatory catch-up. Additionally, modern bank–nonbank lending partnerships have become increasingly complex, with risk-sharing and technology models that existing frameworks were not designed to address, creating uncertainty these standards aim to help resolve.
CFES engaged lending practitioners across model risk, compliance, and credit operations to ensure the standards reflect real-world environments, incorporated input from lending advocacy groups to account for diverse product types and business models, and mapped requirements to supervisory expectations to ensure relevance and alignment with federal regulatory intent.
“Creating a healthy lending ecosystem requires clear expectations for fairness, transparency, and responsible technology use,” said Kareem Saleh, CEO and Founder of FairPlay.ai. “By establishing a unified framework for model governance and consumer protection, CFES is helping the industry operationalize these commitments.”
The lending standards build on the Core Risk & Compliance Standards CFES released earlier this year by expanding into the areas that require lending-specific specialization. Enhancements include more detailed expectations across the credit lifecycle, from marketing through servicing and collections; eight new standards addressing credit model governance, validation, monitoring, and AI explainability; and tailored guidance for consumer protection obligations under ECOA, FCRA, adverse action rules, and ability-to-repay expectations.
“Banks, fintechs and regulators all benefit when expectations are clear and consistent,” said Nat Hoopes, Vice President - Head of Policy and Regulatory Affairs of Upstart. “These standards provide a foundation for operating compliant lending programs, while the accompanying Lending Checklist offers immediate practical value, giving organizations a straightforward yes/no assessment of minimum controls needed before going live. This combination enables responsible innovation and improves outcomes for consumers and the financial system.”
To ensure the standards remain current as technology, regulation, and market dynamics evolve, CFES will maintain dedicated working groups focused on lending, model risk, and responsible AI adoption. The coalition will also continue engaging with federal and state regulators to support alignment and transparency across the ecosystem.
About the Coalition for Financial Ecosystem Standards
The Coalition for Financial Ecosystem Standards (CFES) is a member-led coalition of banks and fintechs whose mission is to empower policymakers and industry innovators to drive sound growth in financial services. In partnership with FS Vector, CFES develops audit-ready standards for risk management and compliance in bank-nonbank partnerships. CFES also focuses on frameworks and guidance that address the critical gaps in financial services resulting from where technological progress outpaces historical guidance.
For more information about CFES and its initiatives, please visit https://thecfes.com
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