Small entities expected to be affected by the Consumer Financial Protection Bureau’s Dodd-Frank Section 1071 rulemaking recommended that the CFPB prioritize simple options in rulemaking, with clear written guidance and alignment definitions and reporting with other federal data regimes, according to a small business review panel report today. The panel—which included leaders from three American Bankers Association member banks—met as required by the Small Business Regulatory Enforcement Fairness Act to examine the CFPB’s Section 1071 outline, which concerns the collection of credit application data for women-owned, minority-owned and small businesses.
Small entity representatives “nearly uniformly suggested that the Bureau aim to draft simple regulations, and choose simpler options if possible, noting that more complex rules tend to make compliance more difficult and drive up compliance costs, which could potentially increase prices or reduce small businesses’ access to credit,” the report found. “SERs urged the Bureau to align with other Federal data reporting regimes—such as HMDA, CRA, CDFI Fund, or SBA—if possible.”
Many panel participants expressed concern that the rulemaking would pose disproportionately high compliance costs for smaller lenders, perhaps increasing the cost of small business credit, the report said. The panel recommended that the CFPB consider sample disclosure language that lenders can use to inform loan applicants about the data collection. The report also covers SERs’ perspectives on the scope of the rulemaking, the possibility of an exemption for smaller lenders, definitions related to applicants, covered products and data points, the timing of data collection, data privacy and the reporting process.