WASHINGTON—The Consumer Financial Protection Bureau has issued the procedures its examiners will use in identifying consumer harm and risks related to the Military Lending Act rule, which was updated in July 2015.
The CFPB said the procedures being released are to provide guidance to the industry on what the CFPB will be looking for during reviews covering the amended regulation.
“Protecting servicemembers is a priority for the CFPB,” said CFPB Director Richard Cordray in a statement. “The updated exam procedures being released today will help ensure that servicemembers and their families are dealt with in a fair and safe manner when attempting to access credit.”
As part of the updated MLA, when lending to servicemembers and their dependents creditors must abide by the following requirements:
- A 36% rate cap
- No mandatory waivers of consumer protection laws
- No mandatory allotments
According to the CFPB, early examinations will evaluate financial institutions’ compliance management systems and overall efforts to follow the rule’s requirements. Specifically, examiners will consider an institution’s implementation plan, including actions taken to update policies, procedures, and processes; its training of appropriate staff; and its handling of early implementation challenges, the CFPB said.
The Bureau said it also expects institutions to ensure servicemembers and other eligible consumers are receiving the consumer protections afforded by the Military Lending Act. Risks to consumers resulting from Military Lending Act violations are significant, and the CFPB will exercise its enforcement authority in appropriate cases of substantial consumer harm.
The updated exam guide can be found here.