Certified Regulatory Compliance Manager (CRCM) — Question 259

Martin Taylor, a loan officer at First National Bank, is a long-time friend of Bill Evans, a local homebuilder. Bill would like a line of credit at the bank and discusses the potential loan with Martin. During the discussion, Martin expresses his desire to build a house one day and Bill offers to build him one "at cost plus 5 percent."
If Martin accepts Bill's offer, can he continue to act as his loan officer?

Answer options

• A. No. The value of the gift is too great.
• B. Yes, if Martin discloses this fact to the bank.
• C. Yes, if Martin does not let the discount on the house affect his decision making process.
• D. Yes, if the bank's code of conduct allows such activity.

Correct answer: A

Explanation

Martin cannot continue to act as Bill's loan officer if he accepts the offer, as the value of the gift is considered too significant and could lead to a conflict of interest. The other options suggest that disclosure or the discount's impact could mitigate the issue, but ethical guidelines generally prohibit such situations to prevent any potential bias in decision-making.