Certified Regulatory Compliance Manager (CRCM) — Question 255

First National Bank owns a data processing company that sells financially related data processing services to various businesses in the community. Daniel Tyler, a loan officer, is negotiating a loan to a local CPA firm. He would like to make the loan conditional on the CPA firm's use of the subsidiary data processing firm. May he do so?

Answer options

• A. Yes, because it is not a bank service.
• B. Yes, because it is not related to pricing.
• C. No. It is an illegal tie-in.
• D. No, unless the company was planning to obtain a new data processing service provider anyway.

Correct answer: C

Explanation

The correct answer is C because requiring a borrower to use a specific service provider in exchange for a loan constitutes an illegal tie-in arrangement. Options A and B are incorrect as they do not address the legality of the tie-in. Option D is also incorrect since it does not mitigate the illegality of the tie-in itself.