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  Small Business Lending Data Collection (Regulation B)

On September 1, 2021, the Consumer Financial Protection Bureau (CFPB) issued a proposed rule to amend Regulation B.  Specifically, this proposal is intended to bring Section 1071 of The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) to fruition.  The Dodd-Frank Act was passed way back in 2010 and it called for changes to the Equal Credit Opportunity Act (ECOA) with respect to collecting and reporting certain data on small business credit applications, including those that are minority-owned and women-owned.  It also calls for safeguarding the data, shielding it from certain persons within the loan process, recordkeeping requirements and more.

The intent of these changes is to identify and address fair lending concerns as well as community development needs and opportunities.

While this is still only a proposal, a final rule must be issued no later than March 31, 2023.  It’s imperative that compliance personnel and management understand the potential ramifications for their institution’s current policies, procedures, and processes going forward.

Once a final rule is issued, an 18-month implementation period is anticipated.

Impact

Many financial institutions are already subject to other regulations that require them to collect and/or report certain loan and/or loan applicant data.  Some include the Equal Credit Opportunity Act, Home Mortgage Disclosure Act, Community Reinvestment Act, Beneficial Ownership rules, etc.  While that may help personnel better understand data collection/reporting as a whole, the data proposed to be collected/reported under Section 1071 is different than other requirements.  Knowing how to collect/report data under various rules is likely to cause confusion.

Section 1071 Training Resources

 While this may feel overwhelming, we are here to guide you and train you.

We are in the business of education and quality training is our top priority. Our goal is to see you and your financial institution succeed! You can be assured that everything we do, from in-person training and webinars to our magazine and blog, is done in our signature, plain-English style.

Thought Leadership & Implementation Group

The new Equal Credit Opportunity Act (ECOA) Small Business Lending Data Collection and Reporting (Section 1071 of the Dodd-Frank Act) will soon shine a light on commercial loans and fair lending. The implementation process and mandatory compliance date will seem like a long way out, but in “compliance time,” it will be much shorter than it appears and will come faster than you think!

What steps have you taken to prepare your team? What are your next steps?   

We’ve been down this road before and want to help you eliminate those uneasy feelings. We’ll have top-notch webinars as always, but we’ve come up with something special just for 1071! The Banker’s Compliance Consulting Team has put together a program to help guide you through the 1071 implementation and planning process. The concept is simple; we want to partner with you and your peers through a thought leadership, implementation, and planning membership group and turn the complexities of 1071 into plain English!

Webinars

If you prefer a little more flexibility as to when and where you receive training, webinars are a great solution.  We have a wide variety of webinars for you to choose from devoted to specific 1071 topics.  The shortened format of a webinar (1-2 hours) really allows us to go in-depth with laser-like focus on certain areas of the 1071 requirements.  For example, if your lenders are struggling with completing the Loan Estimate and Closing Disclosure, we have webinars devoted only to form completion.  If you want to learn what you need to do when you have a changed circumstance, want to learn about a 1071 Guidelines.

Live Events

We discussed this proposal (and many other lending compliance topics) during our two-day Virtual Lending Compliance Conference.  You can check out all the Virtual Conferences.

Blogs

Our blog is a great way to say up to date with regulatory developments and topics.  If the regulators issue a Final Rule affecting Section 1071, our blog is the first place you will hear from us.  The blog acts as a great supplement to more formal methods of training and better yet, it’s FREE!

Banking on BBC Magazine

Our Banking on BCC Magazine is a must for any compliance professional.  This monthly, subscription-based, electronic magazine is chock-full of valuable compliance information each month.  We cover a variety of lending, deposit, and BSA compliance topics from recent developments to highlighting areas that have maybe fallen off your radar.  Each month, in addition to great articles, we also feature a Q & A Corner which highlights a few compliance questions we’ve recently received.  There are also regular features such as BSA Bits & Pieces, Management Minute, and a Training Spotlight.

Free Section 1071 Resources

Our free resources are a treasure trove of helpful information designed with the intent of helping you comply with lending regulations.

Be sure to check out our Section 1071 Action Plan in the Free Lending Tools.

We have many free tools. Use the search bar to find exactly what you are looking for, you may find other resources that are also helpful.

Monthly Connection

Our Monthly Connection is yet another way to stay up-to-date on issues related to collecting small business loan data and interacting with your peers in the compliance industry.  While we talk about a wide variety of topics each month, there is ample time to ask questions of our experts and also your peers.  We have always said, “Compliance is not competitive.” and our Monthly Connection is a way for compliance people to help other compliance people.

We began discussing the proposal in our September 2021 Monthly Connection.

There is no one-size-fits-all approach when it comes to a financial institution’s training needs.  That said, we do recommend some variety in the methods you choose.  Variety will not only help your budget but will give you different viewpoints.  Maybe you attend an in-person conference every couple of years and then fill in the gaps with webinars.  Maybe you follow our blog to monitor major regulatory developments and look to the magazine for more in-depth analysis.  The point is, you can tailor training to your wants and needs.

External Section 1071 Resources:

• CFPB’s Proposed Rule
• CFPB’s Summary of the Proposed Rule
• CFPB’s Chart of Proposed Data Points
• Federal Register