Spring 2016 rulemaking agenda
An important part of the CFPB’s mandate from Congress is to make rules governing consumer finance markets more effective and to create new rules when warranted. Today, we’re posting a semiannual update of our rulemaking agenda as part of the federal government’s Unified Agenda of Regulatory and Deregulatory Actions.
Under the Regulatory Flexibility Act, federal agencies must publish regulatory agendas twice a year. We’ve been voluntarily participating in the Unified Agenda. The Office of Management and Budget leads this effort. The Unified Agenda is available in full online , and portions will also be published in the Federal Register. The agenda includes rulemaking actions in pre-rule, proposed rule, final rule, long-term, and completed stages.
Here’s an overview of our major current initiatives.
The Bureau issued a Notice of Proposed Rulemaking earlier this month concerning the use of agreements providing for arbitration of any future dispute between covered persons and consumers in connection with the offering or providing of certain consumer financial products or services. The rulemaking follows a study that the Bureau issued to Congress in March 2015, as required by the Dodd-Frank Act, as well as on preliminary results of arbitration research that were released by the Bureau in December 2013. In fall 2015, the Bureau began the rulemaking process by releasing an outline explaining that it was considering whether to ban arbitration agreements from being used to compel arbitration of consumer class actions and whether to require the reporting of certain information concerning consumer arbitrations to the Bureau to facilitate monitoring. The Bureau convened a panel under the Small Business Regulatory Enforcement Fairness Act (SBREFA) in conjunction with the Office of Management and Budget and the Small Business Administration’s Chief Counsel for Advocacy to consult with small businesses that may be affected by the policy proposals under consideration. The Bureau has also gathered extensive feedback from other stakeholders in preparation for the rulemaking.
Payday, auto title, and similar lending products
In the next several weeks the Bureau expects to release a Notice of Proposed Rulemaking to address consumer harms from practices related to payday loans, auto title loans, and other similar credit products, including failure to determine whether consumers have the ability to repay without default or reborrowing and certain payment collection practices. The Bureau convened a SBREFA panel in April 2015 along with the Office of Management and Budget and the Small Business Administration’s Chief Counsel for Advocacy to meet with small lenders that may be affected by the rulemaking, and has gathered extensive feedback on the proposals from other stakeholders in the last year. This rulemaking builds on Bureau research, including a white paper the Bureau published on these products in April 2013, a data point providing additional research in March 2014, a report about online lenders’ debiting practices in April 2016, and ongoing analysis.
The Bureau also expects to issue a final rule this summer to create a comprehensive set of consumer protections for prepaid financial products, such as general purpose reloadable cards and other similar products, which are increasingly being used by consumers in place of traditional checking accounts. The Bureau issued a proposed rule in November 2014 to bring prepaid products expressly within the realm of the Electronic Fund Transfer Act and its implementing Regulation E as prepaid accounts and to create new provisions specific to such accounts. The Bureau also proposed to amend Regulation E and Regulation Z (which implements the Truth in Lending Act) to regulate prepaid accounts with overdraft services or credit features.
The Bureau expects to issue a final rule this summer to amend a proposal we published in December 2014 to amend certain aspects of mortgage servicing rules that took effect in 2013. The proposal addressed, among other things, enhanced loss mitigation requirements and compliance with certain rules when the borrower is a potential or confirmed successor in interest or is in bankruptcy. We conducted testing of periodic statements for consumers in bankruptcy and published the testing report for comment in April 2016.
Know Before You Owe mortgage disclosure rule
This summer the Bureau expects to release a Notice of Proposed Rulemaking to make small clarifications and provide further regulatory guidance concerning its rule combining several federal mortgage disclosures that consumers receive in connection with applying for and closing on a mortgage loan under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). The project to integrate and streamline the disclosures was mandated under the Dodd-Frank Act and took effect in October 2015. The rule is the cornerstone of the Bureau’s broader “Know Before You Owe” mortgage initiative.
The Bureau is engaged in pre-rule making activities to consider potential regulation of overdraft services on checking accounts. This work builds on earlier research by the Bureau. In June 2013, the CFPB issued a white paper summarizing the CFPB's initial findings from its analysis of overdraft practices. The white paper, which was based on supervisory data from several large banks, highlighted a number of possible consumer protection concerns, including how consumers opt in to overdraft coverage for ATM and one-time debit card transactions, overdraft coverage limits, transaction posting order practices, overdraft and insufficient funds fee structure, and involuntary account closures. In July 2014, the CFPB released a report , based on data from the same sources, providing additional information about the outcomes of consumers who do and do not opt in to overdraft coverage for ATM and one-time debit card transactions. The July 2014 report also explored the transactions that overdraw consumer accounts. The CFPB is continuing to engage in additional research and has begun consumer testing initiatives relating to the opt-in process.
The Bureau is engaged in developing proposed rules to regulate debt collection practices. The federal government for many years has received more consumer complaints about debt collectors than about any other single industry. The Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from engaging in unfair, deceptive, abusive, and other unlawful collection practices, but no federal agency was vested with authority to issue general implementing regulations prior to the creation of the CFPB. In November 2013, the CFPB issued an Advance Notice of Proposed Rulemaking seeking comment, data, and information from the public about debt collection practices, and in January 2014, the CFPB extended the comment period to February 28, 2014. The Bureau is in the process of analyzing responses to a survey seeking information from consumers about their experiences with debt collectors and is engaged in qualitative testing to determine what information would be useful for consumers to have about debt collection and how that information should be provided to them.
Larger participants and non-depository lender registration
The Bureau is continuing rulemaking activities that will further establish the Bureau’s nonbank supervisory authority by defining larger participants of certain markets for consumer financial products and services. Larger participants of such markets, as the Bureau defines by rule, are subject to the Bureau’s supervisory authority. The Bureau expects that its next larger participant rulemaking will focus on the markets for consumer installment loans and vehicle title loans for purposes of supervision. The Bureau is also considering whether rules to require registration of these or other non-depository lenders would facilitate supervision, as has been suggested to the Bureau by both consumer advocates and industry groups.
Women-owned, minority-owned, and small businesses data collection
The Bureau is also in the very early stages of starting work to implement section 1071 of the Dodd-Frank Act, which amends the Equal Credit Opportunity Act to require financial institutions to report information concerning credit applications made by women-owned, minority-owned, and small businesses. The Bureau will focus on outreach and research to develop its understanding of the players, products, and practices in the small business lending market and of the potential ways to implement section 1071. The CFPB then expects to begin developing proposed regulations concerning the data to be collected and determining the appropriate procedures and privacy protections needed for information-gathering and public disclosure.
Implementation of other mortgage rules
The Bureau is continuing other efforts to implement critical consumer protections under the Dodd-Frank Act to guard against mortgage market practices that contributed to the nation’s most significant financial crisis in several decades. Since 2013, the Bureau has issued regulations as directed by the Dodd-Frank Act to implement certain protections for mortgage originations and servicing, integrate various federal mortgage disclosures, and amend mortgage reporting requirements under the Home Mortgage Disclosure Act (HMDA). The Bureau is continuing intensive work to facilitate implementation of the new requirements, including follow-up rulemaking where warranted.
The Bureau is working particularly intensely on planning for implementation of its rule to implement Dodd-Frank Act amendments to HMDA. The Bureau has already released a small entity compliance guide in connection with the rule, which was finalized in October 2015. Though certain elements of the rule take effect in January 2017, most new data collection requirements take effect in January 2018. The Bureau is also working to streamline and modernize the HMDA data reporting processes in conjunction with implementation of the regulatory changes, and is conducting outreach with industry to prepare for both the regulatory and operational changes.
The portion of the Unified Agenda focusing on potential long-term initiatives is available through a separate link here. The Bureau updated that list last fall to include potential rulemakings to address important issues related to credit reporting and student loan servicing.