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Regulatory Brief for July 2022: The latest on UDAAP, Overdraft Fees & Section 1071

2 min read
Aug 10, 2022

Regulatory change is a wheel that never stops turning. What do you need to know about regulatory agency activity for July 2022? Our compliance experts break it down in this month’s regulatory brief. Read on for a quick summary.

LIBOR. With LIBOR’s 2023 end date looming, the Federal Reserve is asking for comments on its notice of proposed rulemaking (NPRM) that provides default rules for certain contracts that use LIBOR. Meanwhile, the Alternative Reference Rates Committee (ARRC) released its LIBOR Legacy Playbook for successfully transitioning away from legacy LIBOR cash products.

FHFA tackles fintech. The Federal Housing Finance Agency (FHFA) established an Office of Financial Technology to centralize the agency’s approach to the adoption and deployment of fintech. It will address emerging risks, agency priorities, and solicit public input into technology’s role in mortgage sector innovation.  

This Month in Enforcement:
DOJ & CFPB Follow Up on Promise for “Vigorous” Redlining Enforcement with $24 Million Mortgage Company Settlement 

HMDA for small business. The Consumer Financial Protection Bureau (CFPB) has until March 31, 2023, to issue its notice of proposed rulemaking for Section 1071 of the Dodd-Frank Act, a court ruled. Section 1071 is also known colloquially as HMDA for small businesses because it will require the collection and reporting of HMDA-like data on small businesses 

Customer due diligence. The agencies are reminding banks and credit unions to use a risk-based approach for customer risk assessments and due diligence (CDD). While the joint statement doesn’t change any requirements or supervisory expectations, it’s an indication that the Fed, FDIC, FinCEN, NCUA and OCC are homing in on this issue. 

New York eyeing overdraft fees. The New York Department of Financial Services will be looking at specific overdraft and insufficient funds (NSF) fees and whether they are deceptive or unfair to customers in future consumer compliance and fair lending exams at banks. NYDFS will also be studying overdraft fees charged in the state, adding to regulators like the CFPB, NCUA, OCC & FDIC that are keeping an eye on the issue.  

Unfair and abusive acts and practices tied to state unemployment. Bank of America American was fined $100 million by the CFPB and $125 million by the OCC for a faulty fraud detection program during the pandemic that wrongly flagged state unemployment benefits as fraudulent and then freezing customers’ accounts. Customers had little to no recourse available to access those funds. The CFPB says the bank engaged in unfair and abusive acts and practices 

Want more details on the Fed’s update to the Reg O FAQs, the FDIC’s clarifications to third-party-related brokered deposit requirements, or NCUA’s proposed rulemaking for cyber notification requirements? 

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