Treasury Department Guidance on the Use of Income Annuities in 401(k) Plans
On October 24th, the Treasury Department issued guidance designed to expand the use of income annuities in 401(k) plans. The guidance makes clear that plan sponsors can include deferred income annuities in target date funds used as a default investment, in a manner that complies with plan qualification rules. In an accompanying letter, the Department of Labor confirmed that target date funds serving as default investment alternatives may include annuities among their fixed income investments. The letter also describes how ERISA fiduciary standards can be satisfied when a plan sponsor appoints an investment manager that selects the annuity contracts and annuity provider to pay the lifetime income. Treasury Department Press Release.
CFPB Guidance to Mortgage Servicers
On October 23rd, the Consumer Financial Protection Bureau (“CFPB”) issued a compliance bulletin and policy guidance to residential mortgage servicers and subservicers in light of potential risks to consumers that may arise in connection with transfers of residential mortgage servicing rights. The CFPB’s concern in this area remains heightened due to the continuing high volume of servicing transfers. Servicers engaged in significant servicing transfers should expect that the CFPB will require them to prepare and submit informational plans describing how they will be managing the related risks to consumers. 79 FR 63295.
CFPB Amends Mortgage Rules
On October 22nd, the Consumer Financial Protection Bureau published amendments to certain mortgage rules issued in 2013. The final rule provides an alternative small servicer definition for nonprofit entities that meet certain requirements and amends the existing exemption from the ability-to-repay rule for nonprofit entities that meet certain requirements. The final rule also provides a cure mechanism for the points and fees limit that applies to qualified mortgages. CFPB Press Release.
Amendment to the Annual Privacy Notice Requirement under the Gramm-Leach-Bliley Act
On October 20th, the Consumer Financial Protection Bureau published amendments to Regulation P, which requires financial institutions to provide an annual disclosure of their privacy policies to their customers. The amendment creates an alternative delivery method for this annual disclosure, which financial institutions will be able to use under certain circumstances. The new rule allows firms that limit their consumer data-sharing and meet other requirements to post their annual privacy notices online rather than delivering them individually. The new rule is effective upon publication in the Federal Register, which is expected shortly. CFPB Press Release.