HOW TO NAVIGATE DODD-FRANK’S SECTION 1071 By Gerald Leveritt, Director of Enterprise Solutions, FileInvite ICBC Associate Member The Consumer Financial Protection Bureau (CFPB) updated Section 1071 of the Dodd-Frank Act. This change requires financial institutions to collect and report detailed data on credit applications from small businesses — particularly those owned by women and minorities. The goal? To promote fairness and transparency in lending while ensuring equal access to credit. But this rule has sparked controversy. Critics point to the privacy concerns and the substantial administrative burden it places on financial institutions. Section 1071 demands that financial institutions not only collect and manage detailed demographic data but also securely store it. On top of that, they must comply with strict record-keeping rules and potential audits. These tasks require significant resources, including updated technology systems, employee training and nuanced data protection measures. As institutions work to meet these new standards, they face the difficult task of balancing transparency with the need to protect sensitive information. This guide will walk you through why Section 1071 is important, who it affects and how your organization can stay compliant. WHY IS SECTION 1071 IMPORTANT? Section 1071 is crucial because it champions fair lending practices for small businesses — key players in the U.S. economy. They employ nearly half of the American workforce and contribute 43.5% of the nation’s GDP. Ensuring small businesses have equal access to credit is, therefore, necessary for balanced economic growth and innovation. Section 1071 aims to promote transparency in lending by mandating data collection on credit applications, which helps identify discriminatory practices. However, this requirement brings challenges. Financial institutions must overhaul their data systems to meet compliance requirements, sparking concerns about privacy and security. 20 | INDEPENDENT REPORT
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