While Consumer Financial Protection Bureau (CFPB or Bureau) enforcement and supervision activity deservedly receives a lot of attention, the CFPB’s timeline for formally regulating the debt collection practices of consumer financial services providers need not be a complete mystery.
In November 2013, the CFPB issued an Advanced Notice of Proposed Rulemaking (ANPR) that requested comment on all manner of debt collection practices. Although recent enforcement announcements and supervisory highlights have touched on the debt collection practices of a wide range of financial services providers, the CFPB has yet to make an announcement on the timeline for rulemaking following the ANPR.
What’s the latest CFPB announcement on the rulemaking?
The CFPB last indicated its pre-rule activities would last until December 2015. But there’s been no definite announcement on the publication of a Notice of Proposed Rulemaking (NPRM), so it may or may not end up being in December 2015.
How will we know if the CFPB is close to an announcement on the NPR?
Under the Small Business Regulatory Enforcement Fairness Act (SBREFA), the CFPB must conduct a Small Business Advocacy Review (SBAR) panel, and CFPB staff has indicated that an SBAR panel would be used for the debt collection rulemaking. Therefore, the most useful method for predicting the timing of the next rulemaking announcement is to watch the SBREFA process that will precede an NPRM.
What is the timeline for the SBREFA process?
The Bureau publishes a SBREFA outline of issues roughly a month before a SBAR panel meets. The Bureau then must publish a SBREFA report within 60 days of the SBAR panel meeting, and the SBAR report often is published with the NPRM. So, while there are no guarantees on NPRM timing, monitoring the progress of the SBREFA process likely will provide the best insight into CFPB’s timing of publishing an NPRM.
What is the timeline for the NPRM process?
When an NPRM is published in the Federal Register it will typically have a public comment period of 60 days or more. The notice and comment process is used to obtain feedback on proposed rules, and may be used by proponents and opponents to set the stage for challenges to new regulations. Depending on the number and substance of comments received, and the decisions the Bureau may make on the proposed rule, there could be another round of rulemaking or eventually a Final Rule would be announced.
When will a Final Rule on debt collection be published by the CFPB?
There is no standard number of months between an NPRM and a Final Rule. The time period will depend on the number and nature of the public comments received, as well as other factors at the CFPB.
When will a Final Rule on debt collection take effect?
There is no expected or usual period of time between the issuance of a Final Rule and its effective date. Often government agencies take into account the impact on industry in adapting to the NPRM requirements and provide for a phase-in period to allow industry to make the necessary changes to operations and compliance.