CFPB Announces Spring 2014 Rulemaking Agenda, Confirms Development of “Larger Participant” Definition for Auto Finance Market
On May 23, 2014, the Consumer Financial Protection Bureau posted its updated semi-annual rule-making agenda, which covers several important categories of upcoming regulatory action.
Defining Larger Participants in Auto Lending Market for Regulation
Through use of its rulemaking authority, the CFPB is continuing to expand the markets for which the term “larger participant” is defined in the context of nonbank entities offering consumer financial products and services. “Larger participants” are subject to direct regulation by the CFPB through its supervision and examination powers. The CFPB has already defined “larger participants” in the debt collection, credit reporting, and student loan servicing markets, and is now, as previously announced, developing a proposal to identify “larger participants” for the auto finance market. The formal regulatory process to define larger participants for nonbank auto lending is scheduled to begin in August. Further, the CFPB plans to issue its final rules defining larger participants in the international money transfer market in September.
Debt Collection Regulations in the Works
Since issuing an Advanced Notice of Proposed Rulemaking in November, the CFPB has been analyzing the 23,000 comments that it received in response to this notice. According to the CFPB’s regulatory agenda, any proposed regulations are not scheduled to be issued until at least December.
Simplified Privacy Disclosure Requirements for Some Companies
The CFPB issued proposed revisions to Regulation P in May related to privacy notices. These revisions would allow financial institutions that do not engage in certain types of information-sharing activities to stop mailing an annual disclosure if they post the annual notices on their websites and meet certain other conditions. By eliminating the annual privacy notices for entities when there has been no change in their privacy policies, the CFPB expects that unwanted paperwork for consumers and unnecessary regulatory burdens will be reduced, at least where a financial institution limits the sharing of information with third parties. The CFPB has not announced a timeframe for the next steps in finalizing these regulations.
Mortgage Regulation Implementation
The CFPB’s rulemaking agenda includes a number of rulemaking actions mandated by the Dodd-Frank Act related to the mortgage industry. For example, the CFPB recently convened a small business review (SBREFA) panel to discuss potential amendments to the Home Mortgage Disclosure Act (HMDA), some of which were mandated by Section 1094 of the Dodd-Frank Act, and which requires certain financial institutions to collect and report information in connection with housing-related loans and applications they receive for such loans. Once the CFPB completes the SBREFA process, it will begin the process of developing a proposed rule concerning the data to be collected and the appropriate format, procedures, information safeguards, and privacy protections for information compiled and reported under HMDA.
The CFPB is also continuing its work to implement a Dodd-Frank Act directive related to consolidation and streamlining of the federal mortgage disclosures required under the Truth in Lending Act and Real Estate Settlement Procedures Act. As part of its regulatory agenda, the CFPB is continuing to work with stakeholders to address questions that have arisen with regard to the 2013 mortgage rules in this area. As outlined in proposed rulemaking from May, the CFPB plans to make additional clarifications and amendments to the mortgage disclosure requirements. The proposed amendments affect the small servicer/small creditor exceptions to the mortgage rules and establish a limited cure procedure where a creditor inadvertently exceeds the “Qualified Mortgage” points and fees limits.
Payday Loans/Prepaid Cards Regulations in the Works?
Following up the CFPB’s white paper from April 2013 in which it summarized its initial findings from its analysis of payday loan and deposit advance products, the CFPB’s proposed regulatory agenda notes that it is considering whether rulemaking is warranted in these two areas, and if so, what types of rules would be appropriate. The CFPB notes that such rules could include requirements for disclosures related to these products or address acts or practices in connection with payday loans and deposit advance products. Finally, the CFPB states that it intends to build upon its Advance Notice of Proposed Rulemaking published in 2012 regarding prepaid cards, including issuing a proposed rule in June to provide greater consumer protections for these products.