WASHINGTON–The CFPB has issued a proposed rule seeking public comment on updates to its rule implementing Section 1071, which concerns small business lending data collection requirements under the Dodd-Frank Act.
The proposal has long been opposed by credit union trade groups.’
Under the new proposal, the CFPB said the objective is to narrow the initial scope of data collection and focus on larger core lenders.
America’s Credit Unions noted it has “vocally opposed” the Bureau’s 2023 rule, saying the rule would require credit unions to overhaul their application systems, retrain staff, and ensure strict firewalls between loan officers and the new data—”creating lending challenges for both lenders and small businesses.”
Key Changes
Key changes under the proposal include:
- Raising the origination threshold for covered institutions from 100 to 1,000 covered credit transactions over two consecutive years
- Lowering the gross annual revenue threshold defining a small business from $5 million to $1 million.
- A narrowing of the number of data points lenders must collect and report under Section 1071, focusing only on core statutory fields and some discretionary ones while eliminating several optional data points such as pricing, denial reasons, and application method, thereby reducing lender burden and improving initial data quality.
Uniform Compliance Date
America’s Credit Unions noted the proposal would set a uniform compliance date of Jan. 1, 2028, for all covered financial institutions, allowing credit unions additional time to adjust compliance systems.
According to the Bureau, the revisions are intended to reduce regulatory burden and align with broader federal efforts to streamline regulations.
“The new proposal follows the CFPB’s 2023 final rule and subsequent court challenges—including one which America’s Credit Unions is an intervenor—that have delayed compliance deadlines for some lenders,” America’s Credit Unions said.
CUs Covered by Court Decision
The trade group noted its member CUs are covered by the 2023 decision, which is currently on appeal in the Fifth Circuit Court of Appeals.
Earlier this year, the CFPB issued an interim rule extending deadlines by about one year to promote consistency across all covered financial institutions, America Credit Unions reminded.
