CFPB Final Rule on Credit Unchanged From Industry-Supported Proposal

The Consumer Financial Protection Bureau (CFPB) published its final rule on the Equal Credit Opportunity Act (Regulation B) on Wednesday (April 22).

The CFPB said in its summary of the final rule that it amends provisions related to disparate impact, discouragement of applicants or prospective applicants, and special purpose credit programs under the regulation implementing the Act, Regulation B.

The rule will take effect on July 21.

PYMNTS reported in November that the Equal Credit Opportunity Act is the federal law that prohibits discrimination in credit transactions, while Regulation B is the operational rulebook that shapes how lenders process applications, request information, determine credit outcomes and communicate adverse actions.

America’s Credit Unions said in a press release that the final rule published Wednesday by the CFPB is identical to the proposed rule that the association supported.

The association said the final rule’s removal of disparate impact language from Regulation B will “reduce uncertainty and avoid chilling innovative, inclusive credit programs.”

America’s Credit Union added that the rule will narrow the discouragement provision to “oral or written statements,” clarify that discouragement covers only statements directed at applicants or prospective applicants, clarify that encouraging one group does not mean discouragement of others, and revised the discouragement knowledge standard so that a violation occurs only when a creditor knows a statement would communicate discriminatory outcomes.

The American Bankers Association said in a report that the final rule is unchanged from the CFPB’s proposal and that the ABA supported the changes to Equal Credit Opportunity Act enforcement.

“Such a framework will advance the purposes of the ECOA, encourage prudent, risk-based underwriting, and discourage arbitrary government enforcement,” the association said in a letter to the CFPB last year.

PYMNTS reported in November that the CFPB also proposed revising small business lending requirements under the Equal Credit Opportunity Act and Regulation B and that this proposal marks a significant turning point for lenders navigating digital underwriting and expanding credit access.

The proposal would adjust coverage thresholds, refine the definition of which applications are reportable and revisit the criteria that determine whether a lender is considered a financial institution under the rule.