Yesterday, the Consumer Financial Protection Bureau (CFPB) published in the Federal Register a proposed rule that would revise certain provisions of Regulation B, subpart B, implementing changes to the Equal Credit Opportunity Act made by section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The CFPB is proposing to:
- Raise the origination threshold for covered financial institutions from the current 100 small‑business credit applications (over two preceding years) to 1,000 such applications.
- Exclude certain lending products from the definition of “covered credit transaction” including:
- Merchant cash advances (MCAs
- Agricultural lending
- Small‑dollar business credit transactions (loans of $1,000 or less
- The focus of data collection would initially be on core lending products (loans, lines of credit, credit cards) and core lenders — a narrower scope than the 2023 rule.
- The CFPB signals that this is an incremental approach, meaning the scope could expand later after initial data collection.
- A Single tier and compliance date. January 1, 2028
What this means for your Institution:
- The proposed change from 100 to 1,000 will dramatically reduce the number of institutions subject to the rule at least initially.
- Exclusion of MCAs, agricultural lending, and small‑dollar loans means less scope of data collection (fewer transaction types) at the onset. The CFPB is leaving it open to expansion later on.
- The incremental approach gives institutions more time to prepare for full collection/reporting and allows CFPB to “test” the framework on core lenders/products first.
- This is a proposal, stakeholders will have the opportunity to comment until December 15, 2025. As with the 2022Changes may still occur.
What’s happens next:
- The proposal opens a public comment period until December 15, 2025
- After comments, the CFPB may issue a final rule reflecting these changes (and possibly additional/modified changes).
- Your institution should plan on:
- the possibility of the narrower initial scope being implemented, and
- a future phase (expanded data collection) so flexibility is key.
- For now, institutions currently subject under the 2023 – 100 threshold should assess whether they still would be under the 1,000 threshold, plan for potential exclusion of certain product types, and be ready to update programs that you may have already started building under the 2023 rules and plan for updates based on the law.
As the CFPB moves forward with this proposed recalibration of Section 1071, institutions should stay attentive to the comment period, anticipate potential adjustments, and remain flexible as the Bureau refines the scope of data collection. We’ll continue to monitor developments and report updates as they unfold. In the meantime, if you have questions about how this proposal may affect your institution, or if your team needs targeted training or support, our compliance experts are here to help.