The American Financial Services Association (AFSA) has expressed its approval of the recent decision by the Consumer Financial Protection Bureau (CFPB) to halt enforcement of certain aspects of the Payday, Vehicle Title, and Certain High-Cost Installment Loans regulation. This decision specifically pertains to the payment withdrawal and payment disclosure components of the rule.
The AFSA has consistently advocated against the implementation of these policies without a thorough evaluation of the "Payday Rule" and its effects on consumers and businesses. These rules were established nearly a decade ago under the leadership of former CFPB Director Richard Cordray. Despite this, the rule's implementation was prioritized by former Director Rohit Chopra and the Biden Administration, without an initial review.
The AFSA previously warned that the proposed regulations could limit credit access for consumers. After initial rules were modified, the AFSA was satisfied with the adjustments. However, as members began to comply with the payment provisions affecting both installment and payday lenders, it became clear that the rules could negatively impact borrowers by restricting their payment options, leading to potential late payments. The AFSA also highlighted that the rules would introduce excessive administrative burdens for small-dollar lenders and their customers.
The CFPB stated that its decision aims to focus resources on supporting "hard-working American taxpayers, servicemen, veterans, and small businesses." The Bureau added that it is considering a notice of proposed rulemaking to narrow the rule's scope. The AFSA has shown support for the review process and is eager to contribute comments.