CFPB: Small-Dollar Lending, Debt-Collection Rules Are Coming
WASHINGTON, D.C. — The day Republicans introduced joint resolutions in both houses aimed at blocking the Consumer Financial Protection Bureau’s new arbitration rule, a bureau staffer noted in a blog post that the regulator isn't done writing, issuing and finalizing rules.
Under the Regulatory Flexibility Act, federal agencies must publish their regulatory agendas twice a year. Kelly Cochran, the CFPB’s assistant director for regulation, detailed the bureau’s spring 2017 rulemaking agenda in a July 20 blog post. Among the 19 rules discussed were the bureau’s rules on small-dollar lending and debt collection, both of which are listed in the “proposed rule stage.”
“We are considering rules to address consumer harms where markets do not operate efficiently and fairly, making it difficult for consumers to make informed decisions and otherwise protect their interest,” Cochran wrote. “In addition, we are focused on the Dodd-Frank Act objective to promote fair competition among financial service providers, which itself has substantial benefits for consumers.”
The CFPB issued its proposed rule targeting payday loans, auto title loans, and certain high-cost installment and open-end loans in June 2016. According to Cochran, the bureau is currently reviewing more than a million comments received during its proposal’s public comment period, which closed last October.
Under the rule, small-dollar lenders would be required to determine whether the borrower can repay the loan when it’s due and still meet basic living expenses and other financial obligations. It would also make it more difficult for lenders to push distressed borrowers into reborrowing or refinancing the same debt, and limit the number of short-term loans a borrower can take out in quick succession, among other mandates.
“In particular, we are concerned that product structure, lack of underwriting, and certain other lender practices are interfering with consumer decision making with regard to such products and trapping large numbers of consumers in