June 15, 2011
Implementation Of Revisions To Equal Credit Opportunity Act And Fair Credit Reporting Act Pursuant To The Dodd-Frank Wall Street Reform And Consumer Protection Act
Oak Tree has utilized its vast resources (proprietary and otherwise) to obtain up to the minute information from a Staff Attorney at the Division of Consumer and Community Affairs at the Federal Reserve Board. Specifically, that the Board has been working diligently to release the Final Rules that were proposed for Regulations B & V, but due to internal conflicts have overshot their self-imposed deadline considerably.
According to the Staff Attorney, the Board had hoped to complete the rule-making process and publish the Final Rule comfortably in advance of the July 21, 2011 deadline. However, there have been delays that were attributed to issues related to another federal agency, and as a result, the Final Rules have not yet been finalized. The Staff Attorney further explained that the compliance deadline for the new regulations will be a minimum of 30 days from the date the Final Rules publish in the Federal Register. The Staff Attorney went on to explain that as a result, it is entirely possible that the compliance deadline for the Regulations will be a date later than the effective date of the new law, which is July 21, 2011. Thus, placing creditors and their vendors in an untenable position, to which the Board is not altogether unsympathetic with.
To summarize, there is a distinct possibility that the law requiring creditors to furnish credit score information in adverse action notices and risk-based pricing notices will take effect before the compliance deadline for the implementing regulations. And as a result, creditors are likely to experience an unpleasant time-crunch when the Final Rules implementing these changes are finally published, which is expected to happen prior to July 21, 2011.
The Board is expecting creditors to wait for the Final Rules and would remind anyone electing to follow the Proposed Rules, that if those rules differ from the Final Rules, such creditors will be required to follow the Final Rules. In other words, choosing to comply with the Proposed Rules provides no direct benefit, while incurring the potential for added costs [data processing and/or reprinting], if the Final Rule turns out to differ from that of the proposal. It is also worth noting that historically speaking, when new or amended regulations have been released with minimal time to comply, there has been a short window of 60-90 days when no enforcement takes place.