Effective date delay for ‘ability to repay’ provisions in payday lending rule generates at least 87 comments

At least 87 comments are now on file to the proposed change in the effective date of “ability to repay” provisions of the federal consumer financial protection agency’s regulation for payday lending, according to initial tallies on federal websites.

The 30-day comment period closed Monday for the Consumer Financial Protection Bureau’s (CFPB) proposed rule extending the effective date to Nov. 19, 2020, of the “mandatory underwriting provisions” of its Payday, Vehicle Title, and Certain High-Cost Installment Loans regulation, which was adopted in 2017. The current effective date is Aug. 19, 2019. Under the provisions, before making a loan, a firm must be able to verify that the borrower can repay it.

The bureau is considering the new effective date because, at the same time that it proposed the change, it also proposed rescinding the ability to repay provisions of its payday lending regulations. That proposal is out for comment until May 15; it has garnered at least 280 comments.

In its notice published in the Federal Register last month, CFPB stated it was concerned that if the Aug. 19, 2019, implementation was not delayed, payday lenders and other “industry participants” would face considerable costs and “revenue disruptions” all because of a rule that “may ultimately be rescinded.”

The bureau also said it has become aware of “certain potential obstacles to compliance that were not anticipated when the original compliance date was set,” including state laws – which payday lenders have said would impede their ability to comply with the federal law, the agency said.

“Similarly, industry participants have indicated that they need additional time to finish building out, or otherwise making investments in, technology and critical systems necessary to comply with the Mandatory Underwriting Provisions of the 2017 Final Rule,” the agency said.

Payday, Vehicle Title, and Certain High-Cost Installment Loans; Delay of Compliance Date