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| CFPB issues Revised 1071 Rule |
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The CFPB Thursday finalized its revised Section 1071 rule, largely as proposed, which includes many credit union-sought changes to reduce regulatory burdens while still enabling credit unions to serve their members effectively.
“Credit unions are aligned with the goals of Section 1071 to ensure small business lending is meeting community development needs and is accessible to all lenders, particularly those owned by women and minorities. These goals are woven into the credit union mission,” said Scott Simpson, America’s Credit Unions president/CEO. “But as we often see, the original rulemaking was significantly burdensome and would have had an adverse effect on small business lending. We appreciate the bureau reconsidering this rule, listening to credit unions, and providing meaningful relief.”
The final rule:
• Raises the definition of a covered financial institution to 1,000 covered transactions (up from 100);
• Reduces the gross annual revenue threshold for a “small business” to $1 million or less (down from $5 million);
• Removes discretionary data points that were included in the 2023 final rule to streamline data collection, reduce operational burdens, and simplify discussions with applicants;
• Replaces the tiered compliance schedule with a single compliance date of Jan. 1, 2028, for all covered financial institutions that originated at least 1,000 covered transactions for small businesses in each of calendar years 2026 and 2027; and
• Eliminates several non-statutory requirements that previously dictated exactly when and how lenders had to collect applicant-provided demographic and ownership data.
The CFPB issued the revised proposal late last year, following the CFPB’s 2023 final rule and subsequent court challenges—including one which America’s Credit Unions is an intervenor—that delayed compliance deadlines for some lenders.
Politico Pro covered Simpson’s reaction to the final rule in a news alert shortly after finalized, as did credit union trade publications.
Copyright © 2024-2026 America's Credit Unions. (link) |
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