* Please note that the recording links will be delivered to you via a downloadable word document in your confirmation e-mail. The materials that corresponds with the recording will be automatically delivered upon purchasing via email from the website.
On October 5, 2017 the Consumer Financial Protection Bureau’s (CFPB) published Regulation OO to implement the Payday, Vehicle Title, and Certain High-Cost Installment Loans Rule (Payday Loan Rule). Originally the Payday Lending Rule addressed two topics:
- Underwriting of certain covered loans and related reporting and recordkeeping requirements. (Mandatory Underwriting Provisions); and
- Requirements and limitations with respect to attempts to withdraw payments from consumers’ checking or other accounts and related recordkeeping requirements. (Payment Provisions)
But significant changes occurred that reduce the burden of the rule.
- On June 6, 2019 the CFPB published a final rule (Delay Final Rule) to delay the August 19, 2019 compliance date for most of the Mandatory Underwriting Provisions to November 19, 2020.
- On July 7, 2020, the CFPB published a final Payday Loan Rule (Revocation Rule) that rescinds the Mandatory Underwriting Provisions of the 2017 rule.
The CFPB is moving forward with implementing the Payment Provisions, which:
- Prohibit lenders from making a new attempt to withdraw funds from an account where two consecutive attempts have failed unless consumers consent to further withdrawals; and
- Require lenders to provide consumers with written notice before making their first attempt to withdraw payment from their accounts and before subsequent attempts that involve different dates, amounts, or payment channels.
The final rule was effective on October 20, 2020; however, the Payment Provisions were stayed by a court order. On August 31, 2021, the U.S. District Court for the Western District of Texas, granted the Consumer Financial Protections Bureau’s (CFPB) motion for summary judgment in Community Financial Services Association of America, Ltd., Consumer Service Alliance of Texas v. Consumer Financial Protection Bureau [and its Director], and ordered that the compliance date of the “Payday, Vehicle Title, and Certain High-Cost Installment Loans” Rule (12 CFR Part 1041) be stayed until 286 days after the date of the court’s order, June 13, 2022. Subsequently the plaintiffs appealed the ruling. During October 2021 the court extended the effective date until 286 days after the appeal is settled.
With most new rules the options are comply or die – either fully implement the rule or risk violations. With the Payday Rule we have advocated for several years that the option is compliance or avoidance. Either build a comprehensive compliance management system to cope with the rule, or management your loan programs to assure that any covered loans are made under one of the coverage exceptions.
In response to the COVID-19 Pandemic, many institutions answered the call from the federal regulatory agencies to respond prudently to the needs of customers. A significant need was short-term lending arrangements. Many such loans are covered loans for purposes of Regulation OO. This expansion in Payday Loans increases the importance of developing and implementing a Payday Loan rule compliance management system.
Most depository institutions do not originate large volumes of “covered loans”. For those with limited covered loans, it is reasonable to tweak the product line-up to avoid the massive new rules. How do you evade the requirements of a regulation that contains two separate requirements (Sections 1041.5(e) and .13) that prohibit evasion? That is one of the many questions answered in this recording.
This two-hour webinar recording explains:
- Regulation OO and its current status as amended by the Delay Final Rule and the Revocation Rule;
- How to comply with the Payment Provisions;
- How to build a compliance management system to assure compliance; and
- The effective date of the rule.
Upon completion of the recording you’ll understand:
- Which financial institutions are covered by Regulation OO;
- What loans are covered by Regulation OO, what loans are exempt, and options for managing loan products to avoid coverage;
- The basic requirements of the Payday Rule including:
- Key definitions from subpart A;
- The elimination of the underwriting provisions from subpart B;
- The payments provisions, including the unfair and abusive practices, prohibited payment transfer attempts rules and the disclosure requirements for attempted payments, from subpart C; and
- The information furnishing, recordkeeping, anti-evasion and severability provisions of subpart D.
- When the various provisions take effect; and
- For every financial institution, between now and next June:
- Policies and procedures must be developed or revised;
- Training must be completed; and
- Systems must be developed or updated.
The recording is designed for lending department management, operations staff, lenders, compliance officers, auditors, and everyone involved in implementing the new rules or adapting current offerings to avoid the compliance burden.