Regulators Release Fall 2016 Update to Rulemaking Agenda
December 12, 2016
December 12, 2016
Both the National Credit Union Administration (NCUA) and the Consumer Financial Protection Bureau (CFPB) provide updates to their rulemaking agenda on the Unified Agenda. The regulators recently released their proposed agendas for the next year.
There are a number of rulemaking initiatives on the agenda, some of the highlights include:
From the CFPB
Business Lending Data (Regulation B)
This is a Dodd-Frank Act requirement to capture HMDA like data for applications made by women-owned, minority-owned, and small businesses. The rulemaking is just in the prerule stage and the CFPB is focusing on outreach and research to develop its understanding of the players, products, and practices in business lending markets. Once the prerule activities are complete, the CFPB then expects to begin developing proposed regulations concerning the collection of the required data.
Debt Collection Rule
Also in the prerule stage. The CFPB released materials in July 2016 for a small business review panel focused on companies that are considered “debt collectors”. The CFPB is also planning on convening a SBREFA panel to focus on companies that are collecting on their own debts in 2017. In addition, the CFPB will continue to analyze the results of information from consumers about their experiences with debt collection and plans to release a report in coming months.
Another rulemaking initiative that is still in the prerule stage. The CFPB has released several reports and white papers over the years regarding Overdraft practices and is continuing to engage in additional research. The CFPB is also beginning consumer testing initiatives relating to the opt-in process. Expect the release of more reports on the research that the CFPB has been doing in early 2017.
Payday Loans and Deposit Advance Products
This rulemaking is still in the proposed rule stage. In July of 2016, the CFPB released a proposed rule to address consumer harm from practices related to payday and vehicle title lending practices. The proposal would cover two categories of loans. First, the proposal generally would cover loans with a term of 45 days or less. Second, the proposal generally would cover loans with a term greater than 45 days, provided that they: (1) have an all-in annual percentage rate greater than 36 percent; and (2) either are repaid directly from the consumer’s account or income or are secured by the consumer’s vehicle. The comment period for the proposed rule ended in October 2016, and there had been an additional request for information which had a comment due date of November 2016. By law, the CFPB has to read and consider all of the comment letters that were submitted. After which they could potentially move on to working on the final rule. At this time, we have no insight into when that might be.
Expect two different proposed rules regarding HMDA in early 2017. The first will just be some technical corrections to the final rule that becomes effective in January of 2018. The second is rulemaking to reconcile the collection of Ethnicity and Race Information between Regulation B and Regulation C.
Expedited Funds Availability Act (Regulation CC)
Since 2011, the amendments to Regulation CC have been on the rulemaking agenda. The rule is on both the CFPB’s and FRB’s agenda since 12 CFR 229 is a FRB rule. The rule is designed to facilitate the banking industry’s ongoing transition to fully electronic interbank check collection and returns. In addition, the rulemaking would remove some outdated references in Regulation CC and potentially make changes to the length of time credit unions could add under the exception hold process.
Potentially we could see the final rule for this in February 2017. The rule would prohibit the use of arbitration clauses from preventing a consumer from joining a class action legal action. The rule would only apply to contracts for consumer financial products entered into after the effective date.
Mostly minor changes and technical corrects to memorialize the CFPB’s informal guidance and clarifications on various issues.
From the NCUA
The NCUA Board possibly will release a proposed rule in January to incorporate supplemental capital provisions in the risk-based capital context. Supplemental capital should not be confused with the secondary capital provisions of Low Income Designated Credit Unions.
Joint Rulemaking on Private Flood Insurance
Ongoing rulemaking out of the Biggert-Waters Act that would require financial institutions to accept private flood insurance plans if the plans meet certain provisions. The proposed rule came out in November 2016 and currently is still open for comment.
Incentive-Based Compensation Arrangements
Also a joint rulemaking that would place certain provisions on inventive based compensation arrangements. The proposed rule had 3 tiers with increasing levels of requirements for the larger financial institutions. The Unified Agenda shows a potential final rule coming out in January 2017.
Compliance Question of the Week
What are the effective dates for the new HMDA final rule?
January 1, 2017: Effective date to exclude low volume financial intuitions (less than 25 closed-end mortgages).
It is important to note that the data collected in 2017 will be the same data that credit unions collect under the current rule.
January 1, 2018: Effective date for institutional provisions, transaction coverage, data collection, recording and disclosures, and electronic submission of loan application register (for 2017 data).
Beginning on January 1, 2018, credit unions that are not excluded from the rule will need to begin collecting data from their members that includes the expanded data points. Additionally, if the threshold is met, credit unions will need to begin collecting data on HELOCs as they are no longer optional.
January 1, 2019: Electronic submission of loan application register (new data set).
January 1, 2020: Quarterly reporting provisions for institutions that reported at least 60,000 covered loans and applications (combined) for the preceding calendar year.
National Credit Union Administration (NCUA)
The NCUA announced an enhancement to its Consumer Assistance Center Portal. The enhancement will now allow credit union CEOs to designate additional staff to view consumer complaints submitted through the portal.
The NCUA announced that insured shares and deposits exceeded $1 trillion in the third quarter of 2016. The NCUA also reported that credit union membership is now at 106.2 million members, delinquency rates remained relatively unchanged, loan volume continues to grow, and the number of low-income designated credit unions is also on the rise.
The NCUA released the agenda for its December 15, 2016 board meeting. This month’s agenda includes consideration on the final rule regarding federal credit union occupancy, planning, and disposal of acquired and abandoned properties.
Federal Reserve Board (FRB)
A new edition of the Consumer Compliance Outlook publication is now available.
The FRB announced the approval of technical amendments to its rule that places identifies and places additional capital requirements on systemically important bank holding companies.
Federal Deposit Insurance Corporation (FDIC)
The FDIC announced that it will hold its December board meeting on Tuesday, December 13, 2016.
The FDIC has released its Third Quarter 2016 State Profiles report.
Office of Foreign Assets Control (OFAC)
OFAC has updated the SDN list as of December 12, 2016. The last update prior to this was December 7, 2016.
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