Final Regulation B rule will provide clarity and protect consumers
Today, the CFPB finalized its rule updating the Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B. The final rule is identical to the proposed rule that America’s Credit Unions supported, which balances fair lending with consumer protection.
When the rule takes effect July 21, it will:
- Remove disparate-impact (effects-test) language from Regulation B, as this will reduce uncertainty and avoid chilling innovative, inclusive credit programs;
- Narrow the discouragement provision to “oral or written statements;”
- Clarify that discouragement covers only statements directed at applicants or prospective applicants;
- Clarify that the notion that encouraging one group does not, by itself, constitute discouragement of non-recipients; and
- Revise the discouragement knowledge standard so that a violation occurs only when a creditor knows a statement would communicate discriminatory outcomes.
The final rule cites America’s Credit Unions’ comments in support throughout.
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