Banking and Finance Law Daily CFPB finalizes Advisory Opinion Policy
Tuesday, December 1, 2020

CFPB finalizes Advisory Opinion Policy

By Stephanie K. Mann, J.D.

In addition, the Bureau issued its first two advisory opinions.

The Consumer Financial Protection Bureau has finalized its Advisory Opinions Policy to publicly address any regulatory uncertainty regarding the Bureau’s existing regulations and provide additional guidance to entities on outstanding regulatory uncertainty. To seek guidance on any regulatory requirements where uncertainty exists, a request can be submitted to the Bureau to avoid any unnecessary compliance costs. Additionally, the CFPB issued its first two advisory opinions.

Final policy. Any person or entity can submit a request for an advisory opinion via an email sent to [email protected]. The Bureau will then review the requests, prioritize requests for response, and issue opinions, which will include a description of the initial request. The Bureau may also initiate its own advisory opinions if the agency believes that it is needed. All advisory opinions will also be published in the Federal Register.

According to the final advisory opinion policy, the Bureau will prioritize open questions "within the Bureau’s purview that can legally be addressed through an interpretive rule." Additionally, the CFPB will evaluate potential topics for advisory opinions based on: alignment with the Bureau’s statutory objectives; size of the benefit offered to consumers by resolution of the interpretive issue; known impact on the actions of other regulators; and impact on available Bureau resources.

Advisory opinions. In its first advisory opinion, the Bureau addressed a question regarding earned wage access (EWA) products. This recent product allows employees to meet short-term liquidity needs that arise between paychecks without consumers being forced to turn to other higher cost products. The Bureau has determined that EWA providers are not offering or extending credit within the scope of Regulation Z—Truth In Lending Act. This determination was made because covered EWA transactions do not provide employees with "the right to defer payment of debt or to incur debt and defer its payment" and the totality of the circumstances surrounding EWA transactions supports the determination that these products are different than those that the Bureau would consider to be "credit."

In its second advisory opinion, the Bureau clarified that education loan products that refinance or consolidate a consumer’s pre-existing federal, or federal and private, education loans meet the definition of "private education loan" under the Truth In Lending Act and Regulation Z. Therefore, the providers must follow all disclosure requirements in Subpart F of Regulation Z in order to enhance the protection of borrowers.

MainStory: TopStory CFPB ConsumerCredit Loans TruthInLending

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