Cordray: Prepaid card proposed rule late summer
CFPB's Richard Cordray discussed prepaid cards, arbitration clauses and the QM points-and-fees 'cure' during Tuesday's hearing.
June 10, 2014 – CFPB’s proposed rule on prepaid cards, originally slated for release this month, should be out by the “end of summer,” CFPB Director Richard Cordray told the Senate Banking Committee Tuesday.
Cordray was testifying before the committee on the bureau’s semiannual report to Congress. The report points to a rulemaking ahead on general purpose reloadable prepaid cards based on comments received on an advance notice of proposed rulemaking.
The CFPB director’s comment on prepaid cards was in answer to a question from Sen. Bob Menendez, D-N.J., who has sponsored legislation to provide some consumer protections for general purpose reloadable prepaid cards. The bill, S. 1867, would restrict prepaid card fees, require pre-purchase fee disclosures and provide some federal share and deposit insurance on prepaid card funds.
Menendez has offered similar legislation twice before. NAFCU is closely following this issue for its impact on credit unions’ regulatory burden.
During the hearing, Cordray also discussed:
Arbitration clauses: He said a study on arbitration clauses, required by the Dodd-Frank Act, should be out by year-end. The act bars forced arbitration on mortgages, but CFPB has discretion to regulate further. Cordray said the report will guide the bureau’s decision making on any future bans or restrictions on forced arbitration to resolve disputes over financial products.
Cure on QM points and fees: A CFPB proposed rule (supported by NAFCU) allowing this responds to industry concerns over how to resolve good-faith errors in calculating points and fees. Cordray said it will allow lenders to operate right up to the points and fees cap without adverse consequences.
CFPB semiannual report
“Prepaid card bill creates new ‘spending account,’”12/30/13
“NAFCU supports CFPB points-and-fees ‘cure,’” 6/6/14