CFPB Does Not Issue Letters Of Action For Small Dollar Lending Product | Weiner Brodsky Kider PC
The CFPB recently Posted a letter of no action (NAL) to a national bank regarding a consumer credit product offered for a small dollar. The letter was issued under the aegis of the Bureau amended NAL Policy, which was updated in September 2019. The NAL Policy was put in place to “provide increased regulatory certainty that the Bureau will not initiate any supervisory or enforcement action against a company for providing a product or service in certain facts and circumstances ”.
The national bank applied for the no-action letter using the template that was released by the Bureau in May 2020. The small dollar credit product described in the NAL is a fixed installment loan amortizing small dollars. The product offers a fixed payment structure, with minimum payments and a term of three months. It offers credit in increments of $ 100, up to $ 500. The product will have a flat fee of $ 5 with no late fees or prepayment charges and the APR cannot exceed 36%. The loan will need to be fully repaid before a consumer can apply for a second loan, and the consumer’s repayment history will be reported to credit reporting agencies. The aim of the product is to make low dollar credit more readily available to consumers.