Safe Harbors Interestingly, the Final Rule has a safe harbor for certain incorrect census tracts, NAICS codes, and application dates. It also has a safe harbor regarding incorrect determinations of small business status, covered credit transactions and covered applications. For example, if the bank initially determines that an applicant is a small business, but then later concludes the applicant is not a small business, the bank would not be in violation if, at the time the bank collected the demographic data, it had a “reasonable basis for believing that the application was from a small business.” Action Plan Now that the Final Rule has arrived, there are a variety of questions and action steps our members should be considering, such as: • Is my bank covered under the new Final Rule? If so, what is the bank’s mandatory compliance date? • How will this affect the bank’s Compliance Management System (CMS)? What policies, procedures and other governance documents or materials may need to be amended? • Is everyone well informed of the changes and their effects, including the Board, senior management, business lines and other stakeholders? • What type of training is planned and for whom? • What do the bank’s business lending processes look like currently and what change management will be required to implement these changes correctly and in a timely manner? • Has the bank established relationships with any vendors? Do the modules or other software offered need to be tailored to meet the bank’s needs? • What will the institution be employing for data integrity purposes? • What does a tailored project implementation plan look like for my institution? Other Resources In addition to the Final Rule itself, the CFPB published a bevy of other accompanying materials. One is a Fact Sheet, which outlines the history of the Section 1071 rulemaking and the various policy objectives driving it. Another is a Policy Statement which indicates “… that the CFPB intends to focus its supervisory and enforcement activities … on ensuring that covered lenders do not discourage small business loan applicants from providing responsive data, including … ECOA-mandated demographic data requests …” The CFPB also published a Filing Instructions Guide, which provides an overview of the filing process, instructions for what to enter in each data field, validation requirements that must be met before the register can be filed and additional resources to assist with inquiries. A Data Points Chart provides a visual guide to the various data point fields and their respective regulatory references, along with a brief description and filing instructions for each. An Executive Summary lays out an overview of the main facets of the Final Rule. Compliance Alliance will be publishing its own summary of the Final Rule very soon. Finally, a Key Dates chart provides a visual representation of the three compliance tiers and their respective mandatory compliance collection and reporting dates. Note that there are some additional tools on the CFPB’s resources page, and more may be added in the future. We’re Here to Help! It goes without saying that this is just an extremely brief overview of all the Final Rule entails. As you approach your compliance date, or just work to determine whether your institution may be covered at all, we’re here to help! Feel free to reach out to our compliance hotline by chat, email or phone and one of our advisors will be happy to walk through your questions with you. w Our Mission Is to Help You Succeed Partner with us for: • Loan participation purchases and sales* • Bank stock financing • Bank executive and employee financing www.bell.bank | Member FDIC Tracy Peterson Call me at 480.259.8280 Based in Phoenix Ariz. Serving Arizona, Colorado and Kansas 38544 *We do not reparticipate loans. 10 THE ARIZONA BANKER
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