Pub. 14 2024-2025

integrates 1071 compliance features such as built-in firewalls and user permission controls to help maintain non-biased lending and compliant reporting. Preparing for Regulatory Changes While organizing the data collection process is crucial, it’s also important for financial institutions to take broader steps to prepare for these regulatory changes. These include educating staff, revising policies and procedures, and considering more standardized pricing and fee structures to align with the 1071 small business lending data regulations. 1071 Data Risk Management and Compliance Strategies Compliance with the 1071 small business lending data regulations will require coordination across multiple departments. To mitigate risks associated with non‑compliance, financial institutions should: • Create a formal project plan and timeline for compliance efforts. • Plan for the training of all relevant staff involved in data collectors, reporting and underwriting. • Establish consistent lending processes to promote data accuracy and compliance. • Consider the formality of the current borrower application process and identify any culture changes needed. • Automate processes to reduce manual errors and speed processes. • Develop internal controls, including those that validate and test the data collected. • Track and report exceptions, particularly those related to pricing, fees and loan structures. By understanding the requirements, preparing in advance and leveraging technology, banks and credit unions can navigate the changes with compliance. Some financial institutions will need to formalize their small business loan application process. Others may decide to balance small business relationship lending with a risk-based pricing model to mitigate unintended disparate treatment among lenders and branches. For institutions facing challenges or staff resource constraints, engaging experienced consultants can help. CFPB 1071 consultants can establish reporting and monitoring processes and recommend any needed policy changes. The CFPB’s 1071 small business lending data regulations represent a momentous change in how financial institutions must collect and report data. By understanding the requirements, preparing in advance and leveraging technology, banks and credit unions can navigate the changes with compliance. Start planning now to make sure your institution is ready for a smooth data collection process under the 1071 rule. Colorado Banker 8

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