Consulting resources help lenders navigate complexity of Section 1071 small business lending rule
With the finalization of new small business lending requirements announced by the Consumer Financial Protection Bureau (CFPB) in late March, Wolters Kluwer Compliance Solutions is offering U.S. lenders a range of targeted, consultative services to foster and advance compliance under the new rule, which implements Section 1071 of the Dodd-Frank Act.
The offerings, including targeted compliance and performance review analysis packages, as well as services to support data preparation, will help provide lenders the capability to obtain information and insights about their small business and farm lending activities under the new rule—including for those lenders that are without the commitment of sufficient resources and staff dedicated toward compliance.
“The purpose of the small business lending rules is to promote fair access to credit for small business and small farms, thus making full compliance an imperative for financial institutions that are subject to the Section 1071 requirements,” said Jason Keller, Associate Director, Advisory Services, with Wolters Kluwer Compliance Solutions. “Preparation for those covered institutions will be critical in helping ensure compliance—and in helping advance the spirit and intent of the new rule to promote access to credit for minority- and LGBTQI- and women-owned small businesses.”
Among the most significant offerings is a Compliance Management System (CMS) review, which evaluates a lender’s CMS framework to help ensure it includes all compliance responsibilities relative to the new rules. The Advisory Services team also offers fair lending risk reviews that can help lenders: identify statistically significant disparities in raw and reported small business and small farm lending data relative to proxied demographic data; identify disparate treatment on prohibited bases; and potential redlining risks.
Wolters Kluwer can help lenders geocode their reportable transactions to ensure accurate filings, and it can generate custom tables that allow lenders to analyze small business and small farm lending by geography and Gross Annual Revenue compared to related demographics, offering insights on where a covered institution may need to improve its marketing efforts to ensure that its lending volume meets or exceeds its peers in the marketplace prior to the mandatory reporting date.
“We can also assist institutions in verifying the integrity of their data prior to their annual data submission, as well as help them in preparing for upcoming regulatory examinations,” Keller explains.
He notes that while mandatory compliance is tiered, based on the volume of transactions that a covered institution expects to report in 2022 and 2023, a covered institution should not delay its preparations.
“It’s essential for lenders to get started in assessing their small business lending profile and activity relative to the new rule, to develop a plan, and to begin implementing the necessary steps that will align their policies and procedures accordingly.”
More information on managing Section 1071 requirements can be found at Wolters Kluwer’s dedicated website.
