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White Collar + Fraud + Investigations + Compliance
Two times a year, the Office of Information and Regulatory Affairs issues a unified agenda showing planned rulemaking activity from various federal regulators. The most recent Unified Agenda of Regulatory and Deregulatory Actions was published on January 5, 2023 and provides a look ahead to what various agencies, including the Consumer Financial Protection Bureau (“CFPB”), will be working on in the coming months.
First, we can expect greater scrutiny of small business lending in the future: the CFPB is almost done with its small business data collection rule which will require lenders to collect and submit dozens of data points, including race, ethnicity, and sex information, for certain business-purpose loans. These requirements will be similar to what is required under the Home Mortgage Disclosure Act for consumer mortgages. The CFPB reports a goal publication of this rule sometime this month, with an expected compliance deadline 18 months later. This will kick off a labor-intensive, vendor-dependent implementation process for small business lenders.
Also of note, the CFPB will begin multiple rulemaking processes that take aim at curbing account fees. One proposal will focus on overdraft fees, looking at whether these fees are finance charges under Regulation Z. That may mean considering the extent to which overdraft programs are credit. Another initiative will consider practices around insufficient funds fees, perhaps assessing whether these charges are unfair, deceptive, or abusive acts or practices (“UDAAP”). A third proposed rule will target credit card penalty fees. The Credit Card Accountability Responsibility and Disclosure (“CARD”) Act requires late fees on such accounts to be reasonable, and the regulation contains a safe harbor amount to meet this standard. A proposed rule could change how this safe harbor is calculated.
Other rulemaking initiatives for the year include regulating automated valuation models and creating a registry/contract data collection system for nonbank financial service providers such as fintechs. The CFPB will also publish a report in February 2023 as it works towards proposing a rule that will enhance consumer control over private financial data. Overall, expect a busy regulatory year from the CFPB in addition to the agency’s ongoing enforcement activity.