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CFPB Signals Action on Arbitration, Debt Collection in Early 2017
Tuesday, December 6, 2016 6:45 AM

The Consumer Financial Protection Bureau released it proposed rulemaking agenda for the next year, which anticipates action on arbitration and debt collection in early 2017, and pre-rule activity on overdraft in January 2017. Highlights of that summary include observations on:

Arbitration: Final rule is projected for February 2017

  • The rule, if finalized in its proposed rule form, would eliminate arbitration clauses that are routinely included in many contracts for consumer financial products, which can protect credit unions from class action lawsuits.
  • CUNA has asked the CFPB to consider the different structure and dispute resolution process at credit unions, noting that while credit unions are less likely to have or to enforce arbitration clauses than many others in the financial services marketplace, there are certainly credit unions that have them as part of some agreements and believe it is important to preserve the option of limiting class action litigation.

Debt Collection: Pre-rule activity projected for February 2017; it could be for the proposed rule for third-party debt collection or the SBREFA panel for first parties.

  • CUNA has urged the CFPB to collaborate with the NCUA on any policy makings surrounding debt collection, particularly since collection activities are directly connected to safety and soundness requirements. Overly rigid debt collection requirements for credit unions that do not consider the holistic approach credit unions take when engaging with their member-owners, which also include financial literacy and education efforts among others are not appropriate. Rules that force credit unions to constrict providing credit to members are not beneficial to consumers.
  • This was a topic discussed by members of CUNA’s Consumer Protection Subcommittee with the NCUA and the CFPB as recently as last week.

Overdraft: Pre-rule activity projected for January 2017; there is expected to be additional research. 

  • The CFPB is continuing to engage in additional research and has begun consumer testing initiatives relating to the opt-in process. The CFPB will be releasing additional research in early 2017 that focuses on smaller financial institutions.
  • CUNA and the state credit union leagues have maintained a strong focus over the past two years to educate the CFPB further about how consumers use overdraft, and why many of them prefer and choose this service as an option. CUNA believes these efforts have been influential in moving the bureau to more fully analyze this issue and not move forward with its original timeline for promulgating rules.

TRID Fix: Final rule expected March 2017

  • CUNA is supportive of proposed changes to the Truth in Lending Act-Real Estate Settlement Procedures Act integrated disclosure (TRID) rule, but asks the CFPB to continue to work on existing issues.

Payday and Small Dollar Loans (No additional information about timing of final rule)  

  • CUNA has strongly advocated that the CFPB should exempt consumer-friendly small dollar loans offered by credit unions from this rule, so that consumers do not lose a safe and affordable option for credit in this market.

In years past the projected timelines found in the CFPB rulemaking agenda have changed, which could be particularly true this year with a new administration taking office in 2017.