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The Consumer Financial Protection Bureau (CFPB) issued yesterday its long-awaited final rule to implement section 1071 of the Dodd-Frank Act requiring financial institutions to compile, maintain and report to the CFPB certain data on credit applications received from small, women-owned and minority-owned businesses.
The final rule applies only to financial institutions within the CFPB’s jurisdiction. In particular, this does not include motor vehicle dealers engaged in indirect vehicle financing transactions, which are subject to the jurisdiction of the Federal Reserve Board (FRB) in this matter. The FRB has not yet proposed a rule to implement section 1071 for such motor vehicle dealers, although, when it does, the FRB can be expected to seek consistency with the CFPB’s final section 1071 rule. For this reason, NADA and the National Association of Minority Automobile Dealers (NAMAD) have jointly advocated on this issue on multiple occasions to both the FRB and the CFPB.
For banks, finance companies and other financial institutions that are covered by the CFPB rule and must report data to the CFPB, the requirements are extensive and these financial institutions may seek to have dealers make adjustments to the credit application process to facilitate their ability to satisfy these requirements.
While the NADA Regulatory Affairs team is in the process of reviewing the CFPB’s final 888-page rule, certain features are particularly noteworthy:
NADA will disseminate additional information on the CFPB’s final rule after it has been more thoroughly analyzed and NADA will continue its active advocacy with the FRB.
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