Consumer Financial Protection Bureau Issues Advisory Opinion to Help Expand Fair, Equitable, and Nondiscriminatory Access to Credit

Consumer Financial Protection Bureau

WASHINGTON, D.C. — The Consumer Financial Protection Bureau this week issued an advisory opinion to address regulatory uncertainty regarding Regulation B, which implements the Equal Credit Opportunity Act (ECOA), as it applies to certain aspects of special-purpose credit programs (SPCPs).

The ECOA and Regulation B prohibit discrimination on certain prohibited bases in any aspect of a credit transaction, but they clarify that it is not discrimination for for-profit organizations to provide SPCPs designed to meet special social needs. The Bureau does not determine whether individual programs qualify for special purpose credit status. Instead, the creditor offering the SPCP must determine the status of its program. Regulation B provides creditors with general guidance for developing SPCPs that are compliant with ECOA.

Through stakeholder feedback and recent comments received in response to the Bureau’s Request for Information on the ECOA and Regulation B, the Bureau learned that stakeholders are interested in additional guidance to help them develop compliant SPCPs.

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To guide this determination and to address this regulatory uncertainty, the Bureau is issuing an advisory opinion with the hope that more creditors will offer SPCPs and increase access to credit to underserved groups. Specifically, the Bureau seeks to clarify the content that a for-profit organization must include in a written plan that establishes and administers a SPCP under Regulation B. The advisory opinion also clarifies the type of research and data that may be appropriate to inform a for-profit organization’s determination that a SPCP would benefit a certain class of people.

“The CFPB is committed to creating real and sustainable changes in our financial system so that all consumers have equal opportunities to build wealth and close the economic divide,” said CFPB Director Kathleen L. Kraninger. “Today’s advisory opinion is our first action since we issued a Request for Information on the Equal Credit Opportunity Act and sought public views on the topic. This action is an important step toward clarifying the regulations and ensuring that traditionally economically disadvantaged groups and communities have equitable access to credit.

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A copy of the advisory opinion can be found here: https://files.consumerfinance.gov/f/documents/cfpb_advisory-opinion_special-purpose-credit-program_2020-12.pdf.

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