FDIC Issues Letter to Financial Institutions Regarding Applicability of Payday Lending Rules

FDIC Payday Lending Deposit Products Risk Management

On November 16, the FDIC issued FIL-52-2015 to advise financial institutions that it revised its 2005 guidance on payday lending, which established the FDIC’s expectations for prudent risk-management practices in the payday loan industry. The letter emphasizes that the 2005 payday lending guidance, as issued in FIL-14-2005, does not apply to depository institutions offering certain products and services, such as deposit accounts and extensions of credit, to non-bank payday lenders. Specifically, the letter states, “[f]inancial institutions that can properly manage customer relationships and effectively mitigate risks are neither prohibited nor discouraged from providing services to any category of business customers or individual customers operating in compliance with applicable state and federal laws.”