Final rule

Facilitating the LIBOR Transition (Regulation Z)

In December 2021, the Consumer Financial Protection Bureau (CFPB) issued a final rule amending Regulation Z, which implements the Truth in Lending Act (TILA), generally to address the anticipated sunset of LIBOR, which is expected to be discontinued for most U.S. Dollar (USD) tenors in June 2023. Some creditors currently use USD LIBOR as an index for calculating rates for open-end and closed-end products. The CFPB amended the open-end and closed-end provisions to provide examples of replacement indices for LIBOR indices that meet certain Regulation Z standards. The CFPB also amended Regulation Z to permit creditors for home equity lines of credit (HELOCs) and card issuers for credit card accounts to transition existing accounts that use a LIBOR index to a replacement index on or after April 1, 2022, if certain conditions are met. This final rule also addressed change-in-terms notice provisions for HELOCs and credit card accounts and how they apply to accounts transitioning away from using a LIBOR index. The CFPB also amended Regulation Z to address how the rate reevaluation provisions applicable to credit card accounts apply to the transition from using a LIBOR index to a replacement index. On April 28, 2023, the CFPB issued an interim final rule with request for public comment to reflect the enactment of the Adjustable Interest Rate Act (LIBOR Act) and its implementing regulation promulgated by the Board of Governors of the Federal Reserve System. This interim final rule, among other things, addresses treatment of the 12-month USD LIBOR index and its replacement index. This interim rule is effective May 15, 2023, prior to the planned cessation of most USD LIBOR tenors after June 30, 2023.