October Regulatory Compliance Briefing

  • October 30, 2023
  • Quantivate

The October Regulatory Compliance Briefing includes recent and upcoming alerts, advisories, and pending actions to be aware of this month.

Regulatory Effective Dates – Next 90 Days

National Credit Union Administration (NCUA)

NCUA Final Financial Innovation Rule: Loan Participations, Eligible Obligations, and Notes of Liquidating Credit Unions

  • Effective Date: October 30, 2023

Consumer Financial Protection Bureau (CFPB)

CFPB Annual Updates to Reg. Z Thresholds

  • Effective Date: January 1, 2024

Additional Advisories and Announcements

The selected advisories and/or announcements below provide information that may be helpful to your organization but were not included as compliance alerts because they do not contain any regulatory changes.

Consumer Financial Protection Bureau (CFPB)

CFPB Updated Small Business Lending Data Collection FAQs

On September 14, 2023, the CFPB issued updates to its Frequently Asked Questions on the Small Business Lending Data Collection Rule. The Rule is currently subject to an order issued by a Kentucky Federal District Court which preliminarily prevents the CFPB from implementing and enforcing the Rule.

CFPB Circular 2023-03: Adverse Action Notification Requirements and the Proper Use of the CFPB’s Sample Forms Provided in Regulation B

On September 19, 2023, the CFPB issued Circular 2023-03. The Circular indicates that when using AI or complex credit models, creditors may not rely on the checklist of reasons provided in the CFPB sample adverse action forms to satisfy their obligations under ECOA if those reasons do not specifically and accurately indicate the principal reason(s) for the adverse action. The Circular discusses legal requirements for adverse action that lenders must adhere to when using artificial intelligence and other complex models.

CFPB Advisory Opinion on Consumer Information Requests to Large Banks and Credit Unions

On October 11, 2023, the CFPB issued an Advisory Opinion providing guidance to banks and credit unions with assets of more than $10 billion on the requirements of, and how to comply with, Section 1034(c) of the Consumer Financial Protection Act. The Advisory Opinion explains that requiring a consumer to pay a fee or charge to request account information is likely to unreasonably impede consumers’ ability to exercise the right granted by section 1034(c), and thus to violate the provision.

CFPB Supervisory Highlights Special Edition: Junk Fees

On October 11, 2023, the CFPB issued a Special Edition Supervisory Highlights on what the agency refers to as “junk fees.” The Supervisory Highlights begins by reiterating the CFPB’s initiative to scrutinize junk fees charged by banks and financial companies, and it then discusses junk fees in the areas of bank account deposits, auto loan servicing, and remittances found during examinations between February and August 2023.

Federal Deposit Insurance Corporation (FDIC)

FDIC Updates to Consumer Compliance Examination Manual

On September 28, 2023, the FDIC provided notice of two updates to its Consumer Compliance Examination Manual: 1) The Review and Analysis chapter (II-5.1) includes revised guidelines for determining which examination activities should be completed off-site versus on-site, and 2) The Fair Debt Collections Practices Act chapter (VII-2.1) was updated to reflect the 2020 and 2021 amendments to Regulation F by the CFPB and the corresponding interagency examination procedures, including debt collection communications.

FDIC Updates to Information Technology Risk Examination Procedures

On September 29, 2023, the FDIC updated its Information Technology Risk Examination (InTREx) procedures. The updates are intended to improve the Audit module‘s usability, specify compliance review steps relative to the Computer Security Incident Notification Rule (Part 304 Subpart C), provide more specificity regarding examiner review of service provider reports of examination, and update links to references. Examiners use the procedures to review information technology risk management at each bank safety and soundness examination.

FDIC Proposed Guidelines Establishing Standards for Corporate Governance and Risk Management

On October 5, 2023, the FDIC issued a Notice of Proposed Rulemaking on Proposed Guidelines Establishing Standards for Corporate Governance and Risk Management for Covered Institutions with Total Consolidated Assets of $10 Billion or More. The Guidelines would be added as Appendix C to Part 364 of the FDIC’s Rules and Regulations Standards for Safety and Soundness and would set forth the general obligations of the Board to ensure good corporate governance.

National Credit Union Administration (NCUA)

NCUA Updates to Simplified CECL Tool

On September 25, 2023, the NCUA released the September 2023 update of its Simplified CECL Tool. The update includes the latest life-of-loan, or Weighted Average Remaining Maturity, factors and other enhancements.

NCUA Letter to Credit Unions: Resumption of Federal Student Loan Payments

On October 11, 2023, the NCUA issued Letter to Credit Unions 23-CU-08. The letter explains that, as Federal student loan interest resumed on September 1, 2023, and payments restart in October 2023, some credit union members may have difficulty meeting their repayment obligations. The NCUA encourages credit unions to work constructively with impacted borrowers and will not criticize a credit union’s efforts to provide prudent relief to borrowers when such efforts are conducted in a reasonable manner with proper controls and management oversight and consistent with consumer financial protection requirements.

Federal Trade Commission (FTC)

FTC Proposed Rule to Ban Junk Fees

On October 11, 2023, the FTC issued a Proposed Rule entitled “Rule on Unfair or Deceptive Fees.” The Rule would prohibit unfair or deceptive practices relating to fees for goods or services, specifically, misrepresenting the total costs of goods and services by omitting mandatory fees from advertised prices and misrepresenting the nature and purpose of fees. The Proposed Rule would only directly apply to businesses that are subject to the FTC’s jurisdiction, however, the federal banking agencies may likely consider the FTC’s interpretation of unfair and deceptive fee practices in applying Section 5 of the FTC Act to financial institutions.

Interagency Announcements

Extension for CRA Consideration Given to Community Development Activities Responding to Hurricane Maria Disaster in Puerto Rico and the U.S. Virgin Islands

On September 20, 2023, the FDIC, FRB, and OCC announced that they are granting a second 36-month extension for recognizing activities that help to revitalize or stabilize Puerto Rico and the U.S. Virgin Islands through September 20, 2026. The agencies have determined that ongoing demonstrable community need remains in the designated areas resulting from the damage caused by Hurricane Maria. As a result, the agencies are extending for the second time the period during which banks can receive consideration as part of CRA evaluations for disaster recovery-related revitalization or stabilization activities in Puerto Rico and the U.S. Virgin Islands through September 20, 2026.

Joint Statement on Fair Lending and Credit Opportunities for Noncitizen Borrowers under the Equal Credit Opportunity Act

On October 12, 2023, the CFPB and Department of Justice jointly issued a statement regarding the potential civil rights implications of a creditor’s consideration of an individual’s immigration status under ECOA. The Joint Statement explains that ECOA does not expressly prohibit consideration of immigration status, and a creditor may consider an applicant’s immigration status when necessary to ascertain the creditor’s rights regarding repayment. The Joint Statement warns, however, that creditors should be aware that unnecessary or overbroad reliance on immigration status in the credit decisioning process may run afoul of ECOA’s anti-discrimination provisions and could also violate other laws.

Future & Pending Regulatory Actions and Compliance Alerts

Financial Crimes Enforcement Network (FinCEN)

  • FinCEN Advance Notice of Proposed Rulemaking to address the vulnerability of the U.S. real estate market to money laundering and other illicit activity — public comment period ended February 14, 2022.
  • FinCEN Pilot Program for SARs Sharing proposed rule — public comment period ended March 28, 2022.
  • FinCEN Proposed Phase II Beneficial Ownership Rule — public comment period ended February 14, 2023.

Consumer Financial Protection Bureau (CFPB)

  • CFPB Notice and Request for Comment Regarding the CFPB’s Inquiry Into Buy-Now-Pay-Later (BNPL) Providers — public comment period ended on March 25, 2022.
  • CFPB Proposed Rule on Credit Card Late Fees – public comment period ended on April 3, 2023.
  • CFPB Statement of Policy Regarding Prohibition of Abusive Acts and Practices – public comment period ended on July 3, 2023.

Federal Deposit Insurance Corporation (FDIC)

  • FDIC Climate Risk Principles — public comment period ended on June 1, 2022.

National Credit Union Administration (NCUA)

  • NCUA rulemaking to modernize and improve the NCUA’s investment rule and to provide regulatory relief was expected in September 2022.
  • NCUA Proposed Field of Membership Rule – public comment period ended on May 30, 2023.

Interagency Proposed Rules

  • OCC, NCUA, FDIC, FRB — Joint, proposed rulemaking regarding uniform rules and procedures for administrative hearings. The public comment period ended on June 13, 2022.
  • CFPB, OCC, FRB, NCUA, FDIC, and FHFA — Joint, proposed rule to implement automated valuation model (AVM) quality control standards. The public comment period ended on August 21, 2023.
  • FDIC, FRB, OCC — Joint, proposed interagency rulemaking on amendments to the regulatory capital rule; comment period ends November 30, 2023.
  • FDIC, FRB, OCC — Joint, proposed rulemaking to impose a long-term debt requirement for certain insured depository institutions; comment period ends November 30, 2023.

Stay on Top of Compliance Changes

For access to the complete analysis, executive summaries, and actions needed to ensure compliance, contact us.