CFPB Extends Compliance Date of Underwriting Provisions in Payday Rule

The Consumer Financial Protection Bureau yesterday issued a final rule extending the compliance date for the mandatory underwriting provisions of its final rule governing short-term, small-dollar loans, from August 19, 2019, to November 19, 2020. The CFPB has separately proposed to rescind those underwriting requirements.

Finalized in October 2017, the payday 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 rule includes a complete exemption 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. In prior comments, ABA has urged the CFPB to extend the compliance date for all provisions in the payday rule, including the payment provisions, and to use the additional 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, which are captured by the rule’s restrictions.