United States: CFPB to release data collection regulation for small business lenders in September
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The U.S. District Court for the Northern District of California recently Posted an order setting September 30 as the deadline for the CFPB to issue a Notice of Proposed Regulatory Proposal (NPRM) on small business loan data based on Section 1071 of the Dodd-Frank Act. Section 1071 amended the Equal Credit Opportunities Act to require financial institutions to collect, store and report to CFPB data on credit applications made by women, minorities and small companies. This data includes the race, gender and ethnicity of the primary business owners and would be used to aid in the enforcement of fair loan laws and to help better identify the business and community development needs of these types. of entities. The command follows a complaint which was filed in 2019 alleging the unjustified delay of the CFPB in adopting regulations to implement Article 1071. The deadline results from a stipulated settlement agreementreached in 2020, which established a timetable for the CFPB to engage in the development of the rules of Article 1071.
Put into practice : Given the top of the CFPB priority In addressing racial inequalities in consumer credit, the potential implications of collecting and maintaining data on race, gender, and ethnicity assume even greater significance for companies funding small businesses. The CFPB is likely to use the 1071 data to initiate supervisory reviews and enforcement actions against these financial institutions when the CFPB believes there is discriminatory decision making based on this data. While the final rule’s effective date will likely be sometime in 2023, affected businesses may want to consider proactive and fair loan reviews.
Originally posted Aug 13, 2021
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