The Economic Growth, Regulatory Relief, and Consumer Protection Act takes effect on Friday, September 21. The act modifies the Dodd-Frank Wall Street Reform and Consumer Protection Act in a variety of ways, including with important changes in the area of consumer protection. Continue Reading
This week, the Office of the Comptroller of the Currency (OCC) signaled a big shift in how it views small-dollar installment loans issued by the institutions it regulates. In OCC Bulletin 2018-14 to the CEOs of all national banks, federal savings associations, and others, the agency announced it now “encourages banks to offer responsible short-term, small-dollar installment loans, typically two to 12 months in duration with equal amortizing payments, to help meet the credit needs of consumers.”
Historically, the OCC and other federal banking agencies have shied away from encouraging their regulated institutions from offering small-dollar loans and left that market to the payday lending industry. The bulletin noted that U.S. consumers borrow nearly $90 billion every year in short-term, small-dollar loans typically ranging from $300 to $5,000, and that many banks have withdrawn from this market. If you read between the lines of the bulletin, the OCC appears to understand that its previous guidance on this subject has driven consumers away from OCC-regulated institutions and, in their place, toward the high-cost payday lending industry. Continue Reading
The annual application period has opened for businesses and other organizations that want to invest in distressed communities with the help of federal tax credits.
This week, the Community Development Financial Institutions (CDFI) Fund is publishing its Notice of Allocation Availability (NOAA) for the calendar year 2018 round of the New Markets Tax Credit (NMTC) program. The NOAA pertains to a total of $3.5 billion in NMTC authority for this year’s round. Continue Reading
Georgia is often lauded as a top state in the nation for business. One of the primary industries supporting this tremendous growth is financial technology (colloquially referred to as “fintech”), with small and large (Fortune 1000) technology-based companies calling the region home. At Parker Poe, we understand the importance of fintech to the overall growth of metro Atlanta and the State of Georgia.
Fintech companies are perhaps uniquely prepared to take advantage of certain Georgia-specific opportunities. In and around the state’s urban centers, they enjoy relatively inexpensive locations. The state’s strong system of higher education provides a pipeline to millennial talent looking to change the world via technology. Moreover, state and local governments have helped advance Georgia’s fintech industry in many ways, from helping companies eliminate restrictions on raising funds, to historically allowing credit card companies to charge competitive rates to customers. Continue Reading
We routinely encounter language in North Carolina employment contracts that prohibits the employee from soliciting the company’s customers or prospective customers for a period of time following separation from employment, which can be a big issue in the banking industry. In many cases, this language appears to have been lifted from old contracts or from agreements written for use in other states. Attempts to broadly prohibit solicitation of prospective customers in North Carolina can risk invalidation of the agreement’s non-solicitation prohibitions.
Congress has passed – and the Trump administration has signaled that the president will sign – a bill to roll back the Consumer Financial Protection Bureau’s sweeping arbitration rule, which the White House has called “uninformed and ineffective policy.” As we explained in our previous blog post, the rule would have banned many financial service companies from using mandatory arbitration clauses in contracts with consumers, opening the door to class action lawsuits against banks, mortgage lenders and servicers, credit card companies, and others who extend credit.
The rule’s opponents criticized it as being more favorable to class action plaintiffs’ attorneys than consumers. Or as the White House put it:
“Under the rule, consumers would have fewer options for quickly and efficiently resolving financial disputes. Further, the rule would harm our community banks and credit unions by opening the door to frivolous lawsuits by special interest trial lawyers.” Continue Reading
As more consumers are choosing to share their financial data to take advantage of innovative fintech products, the financial services industry faces critical questions: Who gets to decide whether financial data is shared? How should that sharing occur? And who is responsible for keeping the information safe?
After soliciting industry comments almost a year ago, the Consumer Financial Protection Bureau has given its initial answers to those questions. It released a set of nine “Consumer Protection Principles” last week designed to help banks, fintech companies, credit unions, credit card companies, and other financial service providers navigate the sharing of consumers’ financial data when consumers request it. Continue Reading
Trillions of dollars’ worth of financial documents use the London Interbank Offered Rate, or LIBOR, to set the interest rate of a transaction. The ICE Benchmark Administration currently maintains a reference for LIBOR by averaging banks’ estimates of how much it costs to borrow from another bank for term periods of one day up to a few months. But the rate that has served as a global benchmark for nearly half a century is now on its way out.
At the end of 2021, the U.K. Financial Conduct Authority (FCA) will no longer require banks to submit their quotes for LIBOR rates. The question – “What will replace LIBOR?” – allows for much speculation at this point, though work has been done to pick a replacement. In the United States, the Alternative Reference Rates Committee (ARRC) has chosen a broad Treasuries repo financing rate as its preferred LIBOR alternative, which is tied to the cost of overnight borrowing collateralized by U.S. Treasury securities. In the U.K., the Risk-Free Rate Working Group (RFRWG) has chosen the Sterling Overnight Index Average (SONIA) as its preferred alternative to LIBOR, which is based on actual transactions in the U.K. overnight unsecured lending and borrowing market. Continue Reading
When a lienholder starts a foreclosure, it usually is focused on getting money into its pocket. Yet a recent opinion from the North Carolina Court of Appeals (In re: Ackah – Sept. 5, 2017) should provide a warning to all lienholders – make sure you get proper service in the foreclosure or you may end up with significant money going out of your pocket instead. And if you have an email address for the property owner, make sure to use it to send notice of the foreclosure.
Gina Ackah owned residential property in an HOA community near Raleigh. Ms. Ackah moved to Africa and leased the residential property to a tenant while she was gone but did not tell the HOA of her move. Her mail was forwarded to her uncle in South Carolina. In 2014, Ms. Ackah failed to pay her HOA dues and the HOA commenced a foreclosure. The HOA made numerous attempts to send certified mail notices of the foreclosure to Ms. Ackah at her mother’s and uncle’s addresses, but these notices were all unclaimed. The HOA then posted the foreclosure notice on the front door of the property. Even though the HOA had Ms. Ackah’s email address, it never sent the foreclosure notice to her via email. Continue Reading
On July 10, 2017, the Consumer Financial Protection Bureau (CFPB) announced a new rule that may have significant ramifications for the financial industry. The rule aims to stop a now common feature in financial services contracts: provisions directing customers to private, individual arbitration rather than the courts to settle disputes.
The sweeping rule would ban many financial service companies from using mandatory arbitration clauses in contracts with consumers. The rule does not prohibit such clauses outright, but instead will prevent companies from relying on any arbitration agreement to block a consumer from joining or initiating a class action. The result would be to open the door to class action lawsuits against the vast majority of businesses that extend credit to consumers, including banks, mortgage lenders and servicers, and credit card companies.
In addition, companies will face reporting requirements under the rule for any arbitrations that still happen, either under agreements entered into before the rule becomes effective or for non-class disputes. Parties may then lose the benefit of confidentiality that arbitration can provide. Under the rule, the CFPB would begin posting arbitration data to its public website, starting in July 2019. Continue Reading