Lenders need to familiarize themselves with the Section 1071 final rule
Small business lenders must begin preparing for new data collection requirements from Section 1071 of the Dodd-Frank Act that were finalized in March 2023. Tim Burniston, Senior Advisor, Regulatory Strategy, Wolters Kluwer Compliance Solutions, recently shared insights with The Scotsman Guide on how lenders will be affected by these new regulations, the timeline, the importance of advance planning, and more in a Q&A article.
Burniston stressed that the updated Dodd-Frank Act consists of fair lending regulation, not just an exercise in data collection.
“The data is going to be used by regulators, examiners, advocacy groups, the media and plaintiff’s attorneys to look at patterns associated with access to credit and matters that may be indicative of potential redlining, underwriting issues and pricing issues,” said Burniston. “It would impact lenders in many significant ways. First off, this requires an institution that’s covered by the regulations to have comprehensive and documented procedures in place that are reasonably designed for the application process.”
Additionally, Burniston reminded lenders of the timeline for enforcement by the Consumer Financial Protection Bureau (CFPB) is a tiered implementation schedule based on the number of small-business loan originations by a lender.
