The CFPB has continued to announce additional procedural, rulemaking and administrative changes, with the latest being three postings to the Federal Register on June 18, 2025: 1) a final rule rescinding the Procedure Relating to Rulemaking (the 2012 Rule), 2) an interim final rule amending Regulation B to extend the compliance deadlines set forth in the small business loan data collection and reporting rule (1071 Rule), and 3) a proposed rule to amend its 2013 rule implementing the provision of the Consumer Financial Protection Act of 2010 (CFPA) establishing a Consumer Financial Civil Penalty Fund (Civil Penalty Fund).
Rescinding the 2012 Rule
The 2012 Rule specified both "how the Bureau issues rules and when rules are considered issued." Under the 2012 Rule, a CFPB rule "is deemed issued upon the earlier of (1) when the final rule is posted on the Bureau's website or (2) when the final rule is published in the Federal Register." This definition of issuance was necessary in 2012 because of the "impendency of certain deadlines for rulemaking following the transfer of authorities" to the CFPB imposed by the Dodd-Frank Act. As those deadlines are no longer relevant, current CFPB leadership believes that the 2012 Rule no longer serves a substantive purpose.
The CFPB's final rule rescinding the 2012 Rule will result in agency rules being classified as issued when they are published in the Federal Register. The CFPB, noting the "vital role that the Federal Register plays in providing transparency, public notice and public participation in rulemaking," emphasized that the final rule will deliver "[c]ertainty about the timing of issuances of the Bureau's rules" by requiring the public to consult "only the Federal Register to determine the issuance date of a rule, and not the Bureau's website and the Federal Register, as under the 2012 Rule."
This final rule became effective immediately upon publication in the Federal Register on June 18, 2025.
Amendments to Regulation B
The 1071 Rule requires that "financial institutions collect and report to the CFPB certain data regarding applications for credit for women-owned, minority-owned, and small businesses." Soon after the 1071 Rule's publication in 2023, it was challenged by lenders in federal courts throughout the nation. Though the 1071 Rule set initial deadlines for compliance by covered financial institutions, a 2024 interim rule delayed compliance deadlines in order to comply with multiple orders issued by the U.S. District Court for the Southern District of Texas.
Three federal courts have stayed the rule's compliance deadlines for some market participants while the remaining challenges to the rule are pending. However, compliance dates have not been stayed for those who are not plaintiffs or intervenors in those cases.
The CFPB has also indicated that "it intends to initiate a new Section 1071 rulemaking … as expeditiously as possible," as previously reported by Holland & Knight. In light of these developments, and to facilitate consistent compliance across all covered financial institutions, the interim rule published on June 18, 2025, would delay compliance deadlines by approximately one year under the following schedule for data collection: highest volume lenders to comply by July 1, 2026, moderate volume lenders to comply by Jan. 1, 2027, and smallest volume lenders to comply by Oct. 1, 2027.
The CFPB believes that this length of time "should be sufficient to extend beyond the court-ordered stays and for the CFPB to issue a new proposal to reconsider certain aspects of the 2023 final rule." This interim final rule is effective July 18, 2025, 30 days after publication in the Federal Register. Comments must be received on or before that date.
Covered financial institutions are permitted to continue using their small business originations from 2022 and 2023 to determine their compliance tier, or they may instead use their originations from 2023 and 2024 or from 2024 and 2025.
Covered financial institutions are permitted to begin collecting protected demographic data required under the 2023 final rule 12 months before their new compliance date to test their procedures and systems.
The CFPB also is updating its grace period policy statement to reflect the revised compliance dates to avoid any doubt as to its intentions regarding a grace period when the rule goes into effect. Notably, the CFPB warns that "errors that are not the result of good faith compliance efforts by financial institutions, especially attempts to discourage applicants from providing data, will remain subject to the CFPB's supervisory and enforcement authority."
Amendments to the Civil Penalty Fund
The CFPA established the Civil Penalty Fund, into which the CFPB deposits civil penalties it collects from violators of consumer financial laws. The act allows for amounts in the Civil Penalty Fund to be used "for payments to the victims of such activities for which civil penalties have been imposed under the Federal consumer financial laws." When the victims cannot be located or payments are not practicable, the CFPA permits the CFPB to use the funds that would have been distributed to victims for "consumer education and financial literacy programs."
The CFPB's proposed rule emphasizes the lack of "information on how the Bureau was to exercise its discretion to use funds in the Civil Penalty Fund for the purpose of consumer education and financial literacy programs, should such funds remain available after allocations to victims."
As the 2013 rule omits any stated criteria for selecting consumer education or financial literacy programs and does not place a limit on the amount of remaining funds that may be allocated to such programs, the CFPB presently believes that "the 2013 Rule provides neither adequate guardrails for the agency's exercise of its discretion nor adequate transparency to the public regarding a potentially significant expenditure." Furthermore, "[i]n the absence of adequate guardrails, there could be incentives to bring enforcement actions for the purpose of aggrandizing the operational scope of the agency."
In the 12 years since the 2013 rule, the CFPB notes that it has allocated more than $3.6 billion from the Civil Penalty Fund for payments to victims of activities for which civil penalties have been imposed under federal consumer financial laws.
The CFPB has exercised its discretion to allocate funds to consumer education and financial literacy programs with respect to a single program; allocations for that program amounted to nearly $29 million.
The CFPB additionally noted that though it "does not intend to exercise its discretionary authority to allocate funds to consumer education and financial literacy programs," it does intend to consider" whether revised procedures would be appropriate to address these concerns with respect to any future exercises of this discretionary authority."
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