The Consumer Financial Protection Bureau (CFPB) has released a Small Entity Compliance Guide for amendments to the Equal Credit Opportunity Act (ECOA) and Regulation B, which implement the requirements of Section 1071 of the Dodd-Frank Act. These changes mandate financial institutions to collect and report specific data on certain business credit applications. The guide offers an in-depth overview of the final rule’s requirements and contains examples illustrating how the regulations apply to typical situations.
The guide covers several key aspects of the amendments, including definitions, reportable data points, data collection guidelines, employee firewall establishment, and post-editing data handling. It also includes examples to help financial institutions understand the scope of the rules, such as determining whether they meet the criteria for a “covered financial institution.”
Additionally, the guide provides explanations and clarifications that are also listed in the final rule or commentary. For example, it offers guidance on complying with the requirement to report the “date taken of action.” It also outlines employee firewall requirements and conduct examples that would subject employees to firewalls.
The final page of the guide offers recommendations for determining compliance date tiers for financial institutions. The compliance date tier for a financial institution is based on the number of cover transactions made in 2022 and 2023. It provides suggestions for estimating the number of cover transactions and details the eligible credit deals launched for business customers in 2022 and 2023 for small businesses.
Overall, the Small Entity Compliance Guide for ECOA and Regulation B amendments offers a comprehensive overview of the final rule’s requirements and offers practical examples to help financial institutions comply with these changes.