The rules for nonbanks are expected in March, while the bureau continues to work on proposals on fees, personal data and the Fair Credit Reporting Act.
12/15/2023 1:55 P.M.
3.5 minute read
The Consumer Financial Protection Bureau released its Fall 2023 rulemaking agenda (PDF) with updates that rules on overdraft fees and personal financial data rights are in the proposal stage.
The Fair Credit Reporting Act rulemaking that was the subject of meetings by a small-business review panel this fall is in the pre-rule stage. Financial services trade associations, including ACA International, requested an Advanced Notice of Proposed Rulemaking (ANPR) from the CFPB on its potentially sweeping changes to the FCRA, ACA previously reported. An ANPR would allow stakeholders more opportunity to comment before a proposed rule is issued.
Overdraft fee regulation and personal financial data rights were discussed in CFPB Director Rohit Chopra’s recent hearings with Congress on the bureau’s semiannual report, ACA previously reported.
The summary for the overdraft fee proposal states, “financial institutions offer various types of overdraft services, some of which are subject to Regulation Z and some of which are not. Whether Regulation Z applies depends on whether fees imposed in connection with those services (overdraft fees) are considered finance charges. When the Federal Reserve Board first adopted Regulation Z in 1969, it created special rules for determining whether overdraft fees are considered finance charges. While the nature of overdraft services, including how accounts can be overdrawn and how financial institutions determine whether to advance funds to pay the overdrawn amount, has significantly changed since 1969, the special rules remain largely unchanged. The CFPB is considering developing proposed amendments to Regulation Z with respect to these special rules.”
A notice of proposed rulemaking on overdraft fees is expected this month.
Meanwhile, the proposed rule on personal financial data rights is open for comment until Dec. 29, 2023.
The rule is aimed at driving competition and enabling consumers to have greater control over their financial data while protecting them from data misuse and surveillance, ACA previously reported.
Under the rule, financial institutions would be prohibited from “hoarding” consumers’ financial data. Instead, they would be compelled to share this data with other companies upon the consumer’s request, giving consumers access to better financial products and services. Additionally, the rule would offer consumers the freedom to sever ties with banks providing subpar services and safeguard against the misuse of their sensitive financial data.
The proposed rule seeks to standardize access to data and its terms, fostering a more level playing field for both established and emerging financial institutions, according to the bureau.
According to a client alert from Brownstein Hyatt Farber Schreck LLP, the proposal will have wide impacts on financial institutions and third parties if finalized.
Final Rules
Rules on a registry of supervised nonbank entities with arbitration agreements in their contracts, a registry of nonbank entities facing enforcement actions, and credit card penalty fees are in the final stages.
The final rules for nonbank entities are expected in March 2024, according to the bureau. The final rule on credit card penalty fees is expected in December 2023.
In its request for information for this proposed rule, the CFPB notes that in 2017, “after observing many abuses,” it issued a Compliance Bulletin on unfair, deceptive, and abusive acts or practices related to fees for making payments over the phone, and potential violations of the Fair Debt Collection Practices Act, ACA previously reported.
Now, the CFPB proposes to “lower the immunity provision for late fees to $8 for a missed payment as well as end the automatic annual inflation adjustment. The proposed rule would also ban late fee amounts above 25% of the consumer’s required payment,” ACA previously reported.
ACA has filed comments with the CFPB pushing back on the rulemakings related to the bureau’s authority in nonbank supervision.
Overall, ACA’s comments say the CFPB’s actions in these rules circumvent congressional intent of arbitration agreements, overextend the bureau’s authority and should not be completed until after the U.S. Supreme Court has issued its decision in a pending case on the constitutionality of the bureau’s structure.
The rules on the agenda are expected to be under consideration through October 2024, and the next agenda will be published in Spring 2025, according to the CFPB (PDF).
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