Last week, we started a countdown for the impending final rule implementing the small business data requirements of Section 1071 of the Dodd-Frank Act. Well, the CFPB released it’s Fall 2022 Semi-Annual Agenda and it indicates the final rule will be released this month.
That means the runway to prepare for the most significant regulatory update in decades just got a lot shorter.
With that in mind and in order to help you get ready, we’re re-releasing our popular Section 1071 – Five Critical Steps Needed Now webinar with a few key updates. Streaming live January 31st and designed to illustrate the scope and impact of Section 1071 on your institution, you’ll come away with…
- An understanding of the 21 required data fields outlined in the proposal and insight into how your institution can capture that data
- Actionable strategies for creating and conducting an effective 1071 Gap Analysis
- Tips for creating a proactive plan to prepare both employees and customers for changes in your lending process
In the meantime, here are a few tips to ensure your institution begins to prepare as effectively as possible and gets started on the right foot.
Proposed Mandatory Dates:
- The effective date for the final rule will be 90 days after its publication in the Federal Register, which would be on or before Monday May 1, 2023.
- The compliance date for implementing the rule is expected be 18 months after the date of publication of the final rule in the Federal Register or July 31, 2024. Which makes the industry speculation for a partial year reporting more plausible.
What should my financial institution be doing now?
- Keep your eyes peeled for the final rule
It is important to get and understand the final rule as soon as you can. Then, you can begin to outline what it will mean for your institution, get started on a Gap Analysis, inform stakeholders in their role in implementing necessary changes, and get started on training.
- Dive into your institution’s current commercial lending process
Understanding the institution’s lending process from start to finish will help you more easily identify data collection points, risks, and single points of failure. Once you’ve gotten your arms wrapped around the current process, start talking to commercial lending employees about key changes, if you haven’t already.
- Create an action plan
Even if the proposed rules differ slightly from the final ruling, the proposal is still a good guide for what to expect. Start making a plan now for how your institution will comply. The findings from your 1071 Gap Analysis, if you decide to conduct one (which we highly encourage), are an excellent guide for creating your compliance action plan.
- Raise Board and management awareness
Getting compliant with a regulatory update of this size is going to require cooperation from nearly every person and department in your institution. Communicate proactively with your Board of Directors and senior leadership teams and make sure they’re aware of the basic requirements, the impact on your institution, and your plan to address that impact.
We’ll be announcing lots of new 1071 training and resources in the coming weeks that will help you tackle this immense regulatory change as effectively and efficiently as possible. Below, you’ll find a few popular 1071 preparation tools we’ve already developed:
- How to Conduct a Section 1071 Gap Analysis and Create a Plan for Compliance
- Section 1071 Whitepaper
- 1071 Board and Senior Management Update Template