CFPB Announces Reconsideration of Rule for Small Dollar Lending Market

The move signals a focus on deregulation under Acting Director Mick Mulvaney’s leadership.

1/16/2018 10:55:00 PM


The Consumer Financial Protection Bureau is reconsidering its final rule for the small dollar lending market, also known as the payday lending rule, according to a statement issued from the bureau Jan. 16, the date the rule became effective. 

The bureau’s announcement is an example of how new leadership at the CFPB, under Acting Director Mick Mulvaney, is already having significant impact on the bureau’s rulemaking efforts.

“Although most provisions of the Payday Rule do not require compliance until Aug. 19, 2019, the effective date marks codification of the Payday Rule in the Code of Federal Regulations.  Today’s effective date also establishes April 16, 2018, as the deadline to submit an application for preliminary approval to become a registered information system (“RIS”) under the Payday Rule,” according to the CFPB’s statement. “However, the Bureau may waive this deadline pursuant to 12 C.F.R. 1041.11(c)(3)(iii). Recognizing that this preliminary application deadline might cause some entities to engage in work in preparing an application to become a RIS, the Bureau will entertain waiver requests from any potential applicant.”

The CFPB issued the final rule in October 2017, imposing complex new requirements on payday loans, auto title loans, deposit advance products and longer-term loans with balloon payments.  The previous proposed rule reportedly drew over one million comments, the majority of which were from opponents of the CFPB’s proposals, including a huge number from consumers who have relied upon and benefited from payday loans.

In its own comment letter opposing the payday lending proposed rule, ACA International emphasized the CFPB’s fundamentally flawed process leading up to the proposed rule and strongly urged the CFPB to withdraw its misguided proposal in the October 2016 filing. Given this, ACA applauds the CFPB’s recent decision to reconsider the flawed small dollar lending final rule.

ACA is hopeful that, under new leadership, the CFPB will take appropriate steps in all rulemakings to ensure that any new regulations are reflective of operational realities, solve an actual as opposed to a perceived problem in the marketplace, are based on empirical evidence, and adhere to important statutory requirements.

ACA International will continue to follow the reconsideration of this rule by the CFPB.

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