The Consumer Financial Protection Bureau (CFPB) on Tuesday issued a final rule concerning small dollar lending. The final rule rescinds the mandatory underwriting provisions of the 2017 rule, but does not rescind or alter the payments provisions of the 2017 rule.
“We’re disappointed the CFPB declined to entirely exempt credit unions from its 2017 payday rule. The rescission will likely ensure consumers can continue to access small dollar credit from depository lenders that never should have been included within the scope of the rule in the first place,” said Elizabeth Eurgubian, CUNA’s deputy chief advocacy officer. “We’ll continue to engage the Bureau on the impact of the payments provisions and expanding the rule’s payday alternative loan exemption.”
The Bureau also announced that it would undertake research to identify information that could be disclosed to consumers during the small dollar lending process to allow them to make the most informed choices.
Today's final rule is the latest step toward implementing the payment provisions of the Bureau’s 2017 final rule intended to increase consumer protections from harm associated with lenders’ payment practices. This includes restrictions on withdrawals from accounts from which two consecutive previous attempts have failed, providing consumers with written notice before certain transactions, and more. CUNA had previously raised concerns about the impact the payments provisions could have on credit unions offering covered emergency credit products to members.
The agency also released a ratification of the payment provisions in light of the Supreme Court’s recent decision in Seila Law. Although the payments provisions are currently stayed by court order, the Bureau as indicated its intent to seek to have them go into effect with a reasonable period for entities to come into compliance.
Previously, CUNA submitted its comments in response to a CFPB proposal to rescind the mandatory underwriting provisions within the payday rule.