In this eBook Fenergo’s Director of Thought Leadership, Tracy Moore, outlines the basics of what businesses in the United States need to know about Section 1071.
As it’s developed, Section 1071 has generated significant controversy and legal challenges. While it’s currently subject to litigation, financial institutions are advised to prepare for future impacts on compliance, resourcing, and costs relating to the rule.
What is Section 1071?
In the United States, the Consumer Financial Protection Bureau (CFPB) has introduced a new rule, 12 C.F.R. Part 1002, implementing Section 1071 of the Dodd-Frank Act.
This rule is part of a broader trend towards increased regulatory scrutiny in commercial lending, especially in the small business sector. It came into effect on March 30, 2023, and is a direct response to the Dodd-Frank Wall Street Reform and Consumer Protection Act’s Section 1071.
The rule brings forth data collection and reporting requirements for lenders involved in small business lending and, if implemented, this rule will cover a wide variety of financial institutions, including:
- Traditional banks
- Credit unions
- Online lenders
- and any other financial institutions that engage in small business lending activities
Specific requirements and reporting obligations will vary depending on the size and volume of small business lending your institution conducts.
The rule itself is a lengthy pdf document totaling 888 pages, a complex document which financial institutions must thoroughly get to grips with in order to get started. This resource provides an overview of the rule’s key provisions, compliance considerations, and the context surrounding the rule – including some controversies.
To learn more about upcoming compliance developments, check out our 2024 Global Regulatory Outlook report.
Ready to futureproof your business’ approach to compliance and client lifecycle management? Get in touch with a member of the Fenergo team today.
*This eBook contains general, condensed summaries of actual legal matters, regulations, and opinions for informational purposes. It is not meant to be and should not be construed as legal advice.