Earlier this year the CFPB issued its long-awaited proposal for implementing Section 1071 of the Dodd-Frank Act, which requires collection of credit application data for small businesses, including women-owned and minority-owned small businesses. Comments on the proposal are due January 6, 2022. WBA will be creating a draft comment letter for use by members to reply to CFPB regarding concerns and impact of the proposal on banks. WBA encourages each bank to consider submitting its own letter reflecting bank-specific information. In preparation for these comments, WBA has prepared the following considerations regarding the rule.
What specific burdens will your institution face as a result the proposal? Some examples might include:
- Costs, technology, training, staffing, customer-facing educational information needs.
- Review of application process (based upon the rule’s definition of application).
- Is the proposed “firewall” process workable for the bank?
- What sort of implementation period will be necessary?
More specifically you might consider:
- Will bank need to hire new staff (compliance, processor, etc.)?
- Technology costs, such as a new platform, or 1071 data software.
- Costs associated with updating existing systems, testing, applications, training, development of new policies and procedures, legal consultation, review of implementation, etc.
- New annual costs related to collection such as customer service, data management, resolution of errors, exam prep, etc.
In preparation for filing comments, banks should plan to provide specific estimates where possible. For example, if bank predicts new software will be necessary to capture the data, be prepared to provide CFPB with a specific cost if possible.
As mentioned above, WBA will be creating a draft comment letter for use by members to reply to CFPB. The letter will be released shortly to allow banks time to personalize their letter with bank-specific information. For more information about CFPB’s Section 1071 proposal, please see the WBA Toolkit and PowerPoint materials.