CFPB Signals ATR Changes Under Payday Rule

An American Banker article suggests that the Consumer Financial Protection Bureau (CFPB) will likely remove ability-to-repay (ATR) provisions from its 2017 payday lending rule. In its Fall 2018 Rule-making Agenda released in October the CFPB said that it would issue a proposed rule-making early this year to revisit certain provisions of the rule.

While the Bureau has not formally issued the proposed rule-making, the article says it could be "within days or weeks."

In addition to addressing ATR provisions, the proposed rule-making is expected to change the compliance date. The American Banker article also indicates the proposal will remove limits on repeat re-borrowings by a single consumer.

The payday lending rule had been set to take effect in August. However, a lawsuit was brought against the Bureau to prevent enforcement of the rule. The court ultimately granted a stay of the rule's compliance date following the Bureau's announcement of a pending proposal.

While the final payday rule addresses many concerns raised by credit unions, the industry has asked the CFPB to expand the rule's safe harbor provision as the NCUA seeks to enhance its payday alternative loans (PALS) program. With the assurance of a safe harbor, credit unions will by more likely to adopt PALs programs.