Industry win: CFPB proposes adjustments to Section 1071 rule

The CFPB has issued a proposed rule seeking public comment on updates to its rule implementing Section 1071 small business lending data collection requirements under the Dodd-Frank Act. Through the new proposal, the CFPB aims to narrow the initial scope of data collection and focus on larger core lenders, which would be a positive change for credit unions and their small business members.

America’s Credit Unions has vocally opposed the Bureau’s 2023 rule, as it would require credit unions to overhaul their application systems, retrain staff, and ensure strict firewalls between loan officers and the new data—creating lending challenges for both lenders and small businesses.  

Key changes include raising the origination threshold for covered institutions from 100 to 1,000 covered credit transactions over two consecutive years and lowering the gross annual revenue threshold defining a small business from $5 million to $1 million. The CFPB’s proposed rule would also significantly narrow the number of data points lenders must collect and report under Section 1071, focusing only on core statutory fields and some discretionary ones while eliminating several optional data points such as pricing, denial reasons, and application method, thereby reducing lender burden and improving initial data quality.

The proposal would set a uniform compliance date of Jan. 1, 2028, for all covered financial institutions, allowing credit unions additional time to adjust compliance systems. The CFPB noted these revisions are intended to reduce regulatory burden and align with broader federal efforts to streamline regulations.

The new proposal follows the CFPB’s 2023 final rule and subsequent court challenges—including one which America’s Credit Unions is an intervenor—that have delayed compliance deadlines for some lenders. America’s Credit Unions members are covered by the 2023 decision, which is currently on appeal in the Fifth Circuit Court of Appeals.  

Earlier this year, the CFPB issued an interim rule extending deadlines by about one year to promote consistency across all covered financial institutions.

America’s Credit Unions will provide comments on the new proposal and solicit member feedback via a Regulatory Comment alert.