Fed proposes 3-year extension of consumer leasing rule (Reg M) info collection

The Federal Reserve Board is proposing to extend for three years its recordkeeping and disclosure requirements for financial firms related to the federal consumer protection agency’s consumer leasing rule, according to a notice Thursday in the Federal Register.

The requirements relate to the Consumer Financial Protection Bureau’s (CFPB) Regulation M, which implements the Consumer Leasing Act (CLA). The Fed’s proposal would both extend the requirements for three years and revise the methodology for calculating the burden associated with the requirements. Comments are due June 4.

The CLA and Reg M require lessors uniformly to disclose to consumers the costs, liabilities, and terms of consumer lease transactions; disclosures are made to consumers before they enter into the transactions and in advertisements that state the availability of consumer leases on particular terms. Reg M generally applies to consumer leases of personal property in which the contractual obligation does not exceed $50,000, adjusted annually for inflation (the inflation-adjusted threshold is $55,800 in 2018), and has a term of more than four months.

The Fed notice shows there are five respondents to this information collection, which applies to state member banks with assets of $10 billion or less that are not affiliated with an insured depository institution with assets over $10 billion (irrespective of the consolidated assets of any holding company); non-depository affiliates of such state member banks; and non-depository affiliates of bank holding companies that are not affiliated with an insured depository institution with assets over $10 billion.

The revision on estimated disclosure burden, intended to add clarity and transparency, would use the estimated average number of lease contracts each Fed Board-supervised institution initiates annually, assuming it takes approximately 6.5 minutes to populate and provide each disclosure.

The Fed is inviting responses to the following:

  • Whether the proposed collection of information is necessary for the proper performance of the Federal Reserve’s functions, including whether the information has practical utility;
  • The accuracy of the Federal Reserve’s estimate of the burden of the proposed information collection, including the validity of the methodology and assumptions used;
  • Ways to enhance the quality, utility, and clarity of the information to be collected;
  • Ways to minimize the burden of information collection on respondents, including through the use of automated collection techniques or other forms of information technology; and
  • Estimates of capital or startup costs and costs of operation, maintenance, and purchase of services to provide information.

Federal Reserve Request for Comments, Consumer Leasing Recordkeeping and Disclosures