CFPB confirms plan to issue new rule on 1071, extend deadlines

The Consumer Financial Protection Bureau said it plans to issue new Section 1071 rulemaking as soon as possible and has extended compliance deadlines for most entities by one year—an extension designed to protect lenders that are not members of ICBA and not otherwise protected by the current stay.

Details: In a status report filed with the Fifth Circuit in ICBA’s lawsuit challenging the Section 1071 rule, the CFPB informed the court of its plans to initiate a new rulemaking process for Section 1071. The CFPB:

• Said it plans to issue a new proposed rule “as expeditiously as reasonably possible.”

• Confirmed it will extend compliance deadlines under the 2023 rule by approximately one year for all regulated entities. The earliest compliance date, now applying to the largest-volume lenders, is set for July 1, 2026.

• Confirmed it will not prioritize enforcement or supervision of the existing rule during this period.

• Asked the court to maintain the current stay and tolling of compliance deadlines for plaintiffs and intervenors while the rulemaking proceeds.

Background: The CFPB’s rule—issued in March 2023—requires lenders to collect and report data on credit applicants, including the race, sex, and ethnicity of the principal owners as well as gross annual revenue.

What This Means for ICBA Members: ICBA members “will not be subject to compliance obligations while the Bureau works to issue a new proposal to reconsider aspects of the 2023 Rule.” The CFPB has indicated that the anticipated rulemaking process could ultimately render the ongoing litigation moot and recommends keeping the stay and tolling of compliance deadlines in place until a final rule is complete.

Recent Actions: The CFPB last month published an interim final rule to extend its 1071 small-business reporting rule’s compliance and reporting dates for lenders that are not members of ICBA and are not otherwise protected by any of the three previously issued court orders that have temporarily stayed the rule’s compliance deadlines.

Pending Legislation: The House Financial Services Committee in April advanced the ICBA-advocated 1071 Repeal to Protect Small Business Lending Act to repeal the statute that underlies the CFPB rule. Further, Chairman French Hill’s (R-Ark.) ICBA-advocated Small LENDER Act (H.R. 941) would mitigate the impact of the 1071 rule by exempting more community banks and small businesses.

Next Steps: The CFPB will submit status updates to the court every 90 days and notify the court when the rulemaking concludes. Within 30 days of the final rule’s issuance, the parties will meet and notify the court on how they wish to proceed.