The American Bankers Association today urged the Consumer Financial Protection Bureau to extend the compliance date for all provisions of its final rule governing short-term, small-dollar loans. The extension would give the CFPB time to revise the rule to exclude traditional consumer loans offered by banks, such as “bridge” loans, demand lines of credit, and loans secured by securities, ABA said in a comment letter. It would also ensure that banks do not expend considerable time and resources to develop compliance systems while the bureau contemplates additional changes to the rule.
Finalized in October 2017, the rule imposes an ability-to-pay test, payment withdrawal restrictions and notice requirements on a wide swath of short-term loans, including payday loans, auto title loans, deposit advances and longer-term loans with balloon payments. The CFPB has proposed to rescind the rule’s underwriting provisions and to extend the August 19, 2019, compliance date for those provisions. It has not proposed to modify, rescind, or extend the compliance date for the rule’s payment provisions.
The CFPB’s proposal does not alter the complete exemption in the rule for banks and other depository institutions that made 2,500 or fewer small-dollar loans in each of the current and previous years and for which these loans account for less than 10 percent of revenues. ABA advocated for this provision to protect banks’ flexibility to serve their customers.