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Financial Services Law Insights and Observations

CFPB finalizes Advisory Opinions Policy, issues two opinions

Federal Issues CFPB Advisory Opinion Regulation Z

Federal Issues

On November 30, the CFPB announced the finalization of its Advisory Opinions Policy, which will allow entities seeking to comply with existing regulatory requirements to request an advisory opinion in the form of an interpretive rule from the Bureau to address areas of uncertainty. Persons or entities interested in submitting a request for an advisory opinion should email advisoryopinion@cfpb.gov. As previously covered by InfoBytes, last June the Bureau launched a pilot advisory opinion program to focus primarily on clarifying ambiguities in Bureau regulations, and issued a request for public comment on a proposal for a new policy on advisory opinions. Under the final policy, the Bureau will review submissions, prioritize requests for response, issue opinions with a description of the incoming request, and “may also decide to issue advisory opinions on its own initiative.” All advisory opinions will be published in the Federal Register to increase transparency. The Bureau notes that it will prioritize open questions within its purview that can be addressed legally through an interpretive rule and adds that it “intends to further evaluate potential topics for advisory opinions based on additional factors, including: alignment with the Bureau’s statutory objectives; size of the benefit offered to consumers by resolution of the interpretive issue; known impact on the actions of other regulators; and impact on available Bureau resources.”

Concurrently, the Bureau issued two advisory opinions: one on earned wage access (EWA) products and one clarifying the definition of certain student education loan products. The EWA advisory opinion addresses the uncertainty as to whether EWA providers that meet short-term liquidity needs that arise between paychecks “are offering or extending ‘credit’” under Regulation Z, which implements TILA. The advisory opinion states that “a Covered EWA Program does not involve the offering or extension of ‘credit,’” noting that the “totality of circumstances of a Covered EWA Program supports that these programs differ in kind from products the Bureau would generally consider to be credit.”

The second advisory opinion addresses a different area of uncertainty concerning the application of Regulation Z, clarifying that “loan products that refinance or consolidate a consumer’s pre-existing Federal, or Federal and private, education loans meet the definition of ‘private education loan’ in [TILA] and Regulation Z and are subject to the disclosure and consumer protection requirements in subpart F of Regulation Z.”

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