INCENTIVE-BASED COMPENSATION The FDIC, OCC and FHFA have adopted a Notice of Proposed Rulemaking to address incentive-based compensation arrangements as required under Section 956 of the Dodd-Frank Act. The NCUA is also expected to take action on the Notice of Proposed Rulemaking in the near future. The proposed rule will apply to institutions with $1 billion or more in assets. The proposed rule includes a prohibition on incentive-based compensation arrangements that don’t include a risk adjustment of awards, deferral of payments, and forfeiture and clawback provisions. There will also be an emphasis on the role of sound governance and risk management control mechanisms. AVAILABILITY OF FUNDS AND COLLECTION OF CHECKS THRESHOLD ADJUSTMENTS The CFPB and the Federal Reserve Board (FRB) jointly adjusted for inflation dollar amounts relating to the availability of customer funds. These changes in Regulation CC include the minimum amount of deposited funds that banks must make available for withdrawal by opening of business on the next day for certain check deposits as well as the amount of funds deposited by certain checks in a new account that are subject to next-day availability. The following thresholds are effective from July 1, 2025, for five years: SECTION 1071 OF THE DODD-FRANK ACT The CFPB announced new deadlines for compliance with Section 1071 on May 17, 2024. This section amends the Equal Credit Opportunity Act (ECOA) to require financial institutions to compile, maintain and submit to the CFPB data on applications for credit for women-owned, minority-owned and small businesses. Compliance deadlines have been updated as follows: CONSUMER FINANCIAL PROTECTION CIRCULAR 2024-03 The CFPB issued a circular on June 4, 2024, to emphasize that covered persons who include unlawful or unenforceable terms in their consumer contracts may violate the CFPA’s prohibition on deceptive acts or practices. The circular highlights that the inclusion of certain terms in contracts for consumer financial products or services may violate the prohibition when applicable federal or state law renders such contractual terms, including those that purport to waive consumer rights, unlawful or unenforceable. RECOGNIZING OPEN BANKING STANDARDS On June 5, 2024, the CFPB finalized a rule establishing the qualifications for recognized industry standard-setting bodies, essential for implementing the forthcoming Personal Financial Data Rights Rule. The rule outlines the necessary attributes for recognition, such as openness, transparency, balanced decision-making, consensus and due process, and provides a guide for standard setters to apply for CFPB recognition. This move aims to prevent dominant firms from manipulating standards and to promote competition, facilitating a transition toward open banking. REVISED COMPTROLLER’S HANDBOOK BOOKLET AND RESCISSIONS The OCC issued version 2.0 of the “Retail Nondeposit Investment Products” booklet of the Comptroller’s Handbook on June 11, 2024. This booklet discusses risks and risk management practices associated with the recommendation or sale of nondeposit investment products to retail customers and provides a framework for evaluating a bank’s retail nondeposit investment product program. FCRA MEDICAL DEBT RULEMAKING On June 11, 2024, the CFPB began accepting public comment on a proposed rule amending Regulation V, which implements the Fair Credit Reporting Act (FCRA), concerning medical information. The CFPB is proposing to remove a regulatory exception in Regulation V from the limitation in the FCRA on creditors obtaining or using information on medical debts for credit eligibility determinations. NEW PROTECTIONS FOR PAYDAY AND INSTALLMENT LOANS The CFPB issued a rule in 2017 to address lenders’ unfair and abusive collection practices. The CFPB found that even after a borrower’s account had been shown to be empty, payday and installment loan lenders would continue attempting to withdraw money from the account to pay off the loan. Under the rule, after two attempts to withdraw funds from an account have failed, covered lenders can’t try again unless the borrower specifically authorizes another attempt. The rule was to take effect in 2019 but has been delayed in the courts. An existing court order pausing the rule is set to expire 286 days after the Supreme Court enters judgment, which was expected on June 17. As a result, the rule will go into effect on March 30, 2025. 2024 GUIDE TO HMDA REPORTING On June 17, 2024, the OCC issued the Federal Financial Institutions Examination Council’s (FFIEC) revised 2024 guide, “A Guide to HMDA Reporting: Getting it Right!” The 2024 guide provides banks with resources to comply with the Home Mortgage Disclosure Act and Regulation C. CFPB ISSUES FAIR LENDING REPORT The CFPB issued its Fair Lending Annual Report to Congress on June 26, 2024. The report describes how the bureau took action against INDEPENDENT REPORT | 21
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