On Tuesday, the CFPB posted an “unpublished” interim final rule related to Section 1071, and it appears to be “published” in June 18th’s Federal Register. This interim final rule will extend Section 1071 mandatory compliance dates for each of the three compliance tiers by just under one year.
The publication goes on to state that Covered financial institutions are permitted to continue using their small business originations from 2022 and 2023 to determine their compliance tier, or they may instead use their originations from 2023 and 2024, or from 2024 and 2025. Covered financial institutions are permitted to begin collecting protected demographic data required under the 2023 final rule 12 months before their new compliance date, in order to test their procedures and systems. The deadline for submitting small business lending data will remain June 1 following the calendar year for which data are collected.
Even with the changes to compliance dates, the CFPB still plans to re-write the regulation which may further impact compliance dates and filing deadlines.
However, it is still important for institutions to plan accordingly. Keep in mind that these extended time frames will allow for the development of stronger processes and controls, not to mention increased prep time for lenders and operations departments.
Looking ahead, our advice is to be flexible and continue to watch for developments. We’ll be monitoring this closely and share any updates or insights as they come.
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If you’d like to learn more or take a closer look at what your institution will need to do for Section 1071, I have an upcoming session you may be interested in…
I designed Conducting a Section 1071 Gap Analysis, taking place July 29th, to help you understand how changes to the reporting requirements impact your organization. We’ll discuss what the law requires, analyze what elements may already be a part of your lending program, and discuss how to strengthen areas that may be deficient.
I hope to see you there!
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