WASHINGTON - The Consumer Financial Protection Bureau is planning to issue rules to supervise large installment and vehicle title lenders, according to a recent report.
The agency released its semiannual rulemaking agenda Friday that indicated it was delaying pending rules on overdraft and debt collection, but also mentioned a new rule to supervise certain lenders offering installment and title loans by January 2016.
The CFPB was expected to look into this area because it was a topic of discussion mentioned in a proposal on how to regulate payday loans. But the CFPB's spring rulemaking agenda, posted on a blog, was the first time the agency set a public timeframe to issue a rule specific to such loans.
"With this release, the CFPB is announcing that it will begin the rulemaking process to designate certain installment and vehicle title lenders as Larger Participants and thereby expand its supervisory reach to those firms," Isaac Boltansky, an analyst at Compass Point Research & Trading, said in a note on Friday. "While we had expected this rulemaking, and the payday [small business panel] outline intimated that it was on the horizon, this is the first public estimate of when the rulemaking effort will enter the next phase."
As far as the highly anticipated rulemaking on payday loans, the CFPB did not set a specific deadline to issue a proposal. Rather, it said the "pre-rule activities" were ongoing in May.
"We recently released an outline of proposals we're considering in connection with regulating payday loans, auto-title loans, and certain other longer-term credit products," wrote Kelly Cochran, the CFPB's assistant director of regulations, in a blog post. "We consulted with a panel of small lenders, under the Small Business Regulatory Enforcement Fairness Act, who may be affected by the rulemaking. . . . We plan to issue a Notice of Proposed Rulemaking later this year after completing additional outreach and analysis."
The CFPB's new agenda also again delayed its rulemakings on debt collection and overdraft. Debt collection rulemaking was slated to start this past April but has now been delayed to December, while overdraft has been pushed from July to October.
"We're continuing to analyze issues relating to overdraft services on checking accounts," Cochran said. "We're conducting additional research and assessing whether rulemaking is warranted."
Still, many industry observers believe the CFPB will ultimately issue a rule on overdraft programs.
"We continue to believe that the CFPB's overdraft rule will focus on issues such as transaction reordering, general nonsufficient fund practices, and overdraft opt-in disclosures," Boltansky said.
Another area many observers believe will lead to rulemaking is on the use of mandatory arbitration clauses on consumer credit. The CFPB has already issued two reports that industry observers said indicated the CFPB's stance against mandatory arbitration. The most recent agenda sets "pre-rule activities" on arbitration for around September.
"We're now evaluating feedback we received and are considering whether rules governing arbitration clauses may be warranted," Cochran said.
There are also several proposals and amendments the CFPB has made to existing rules which it said it plans to finalize through next year. For example, Cochran said it plans to finalize an amendment proposed in January to the "qualified mortgage" rule that would give greater flexibility for lenders in rural or underserved areas by September. The agency also plans to finalize its significant rulemaking on prepaid cards in January 2016.
"We're continuing research, analysis, and outreach on a number of other consumer financial services markets, and we'll update our next semiannual agenda in the fall," Cochran concluded on the blog.