CUs see major reg relief improvement in final payday rule
The Consumer Financial Protection Bureau’s (CFPB) final short-term, small-dollar rule appears to have addressed many concerns addressed by CUNA, leagues and credit unions, a big win for the credit union movement. CUNA is still analyzing the nearly 1,700-page final rule.
“When I spoke with Director Cordray today, I thanked him for directly addressing many concerns credit unions raised with the proposed rule,” said CUNA President/CEO Jim Nussle. “We are pleased the CFPB heeded our recommendations concerning a full exemption for the NCUA Payday Alternative Loan (PAL) program and the many other changes that were made to accommodate consumer-friendly small dollar loan programs at credit unions, including a more common-sense approach to which loans are covered.”
The rule as originally proposed swept in a number of credit unions short-term, small-dollar loan products, and other products such as auto refinance loans.
CUNA meetings with the bureau outlining the same issues date back to when it was first proposed in June 2016, all the way to Wednesday of this week, when CUNA’s Consumer Protection Subcommittee discussed the rule in a meeting with bureau staff.
Initial analysis of the finds positive improvements from the proposed version, including:
- A full exemption for the NCUA’s PAL program;
- An exemption that applies to most loans that are over 45 days with no balloon payments;
- An exemption for providers issuing fewer than 2,500 covered loans per year that represent no more than 10% of revenue;
- Notice and debit requirements that apply to most loans do not apply to credit unions that make loans to their own members, as long as the payments do not trigger overdraft or non-sufficient funds fees;
- The CFPB’s use of Regulation Z (which implements the Truth in Lending Act) to define the cost of credit, rather than its originally proposed definition of a new “all-in annual percentage rate;”
- Exemption for certain salary advances.
Seeing major changes to the rule was a primary goal of CUNA’s Campaign for Common-Sense Regulation, launched earlier this year.