CFPB Pushes Pause On Payday Rule

The Bureau of Consumer Financial Protection (CFPB) has delayed the Aug. 19, 2019 compliance date for the mandatory underwriting provisions for its short-term, small-dollar (payday) rule, according to various reports.

Compliance is being delayed 15 months, to Nov. 19, 2020. The CFPB is also correcting several errors in the rule.

The Consumer Bankers Association (CBA) commended the delay.

“CBA commends the Bureau for reexamining the small-dollar credit marketplace and how lenders in this market meet consumers’ need for credit. We believe it is important that consumers receive the products they want and need at fair prices and on transparent terms. We believe it is equally important to rid the market of bad actors that engage in fraudulent transactions or violate federal laws and fashion rules that deter such conduct,” the CBA said.

“As a policy matter, we support the Bureau’s goal of ending abusive payday lending practices by nonbank lenders. Unlike some nonbanks, depository institutions have long had their consumer lending products and practices examined against consumer protection and safety and soundness standards by various state and federal supervisory agencies, including the CFPB.”

The Credit Union National Association (CUNA) also said it supports the delay, however, the organization called for a delay of the entire rule.

“Given the Payday Rule’s broad scope and the pending challenge to the rule’s legality in federal court, the Bureau should delay the rule in its entirety rather than merely delaying the ability-to-repay (ATR) provisions that are the subject of the rescission proposal,” CUNA wrote in a letter to the CFPB. “A delay of the entire rule is especially warranted if the CFPB intends to amend other aspects of the rule, such as the payments provisions, in the near term.”

CUNA also said it wants the CFPB to examine the issue further and get rid of anything that might have a negative effect on a credit unions’ “small-dollar loans programs while still holding accountable non-depository payday lenders, especially those with histories of bad behavior.”