AFSA says CFPB Small-Dollar Lending Proposal Restricts Access to Consumer Credit
WASHINGTON DC, June 2, 2016 – Today, the Consumer Financial Protection Bureau (CFPB) proposed its rule governing small-dollar lending. The bureau has been working for many months to craft the rule, but that hard work has, unfortunately, resulted in a proposal that will harm consumers’ access to safe, responsible credit.
The American Financial Services Association (AFSA) engaged the bureau several times during its discovery, drafting, and proposition of the small-dollar lending rule, especially as it relates to traditional installment lending.
CFPB Director Richard Cordray highlighted the important role traditional installment loans play in the economy in congressional testimony last September. The bureau also noted that the small-dollar lending industry is complex and that ensuring access to credit while fulfilling its mission to protect consumers is a fine line that must be treaded carefully.
“Despite the Director’s insistence that responsible credit options are necessary in today’s economy, and the CFPB’s admission that the marketplace is complex, the bureau’s proposal does not go far enough. It chose not to consider or include many of the common sense suggestions made by AFSA on behalf of the customers of our member companies,” said Bill Himpler, Executive Vice President of AFSA.
Americans use traditional installment loans for a variety of purchases. Certainly, consumers use traditional installment loans to make ends meet, to pay for emergency repairs, or to fund shortfalls.
However, AFSA has heard far more stories from consumers using traditional installment loans simply because they think the product is fair and enjoy the family atmosphere at AFSA member company locations across the United States. Consumers often use the product to manage cash flow, many times in lieu of their own credit cards.
It is important that any regulation ensures consumers have access to safe, responsible credit like traditional installment loans. Today’s proposed rule threatens that access and will leave many consumers without much-needed, or desired capital.
The association will continue to work closely with the CFPB, leaving no stone unturned to ensure that credit access is maintained and that consumers continue to have access to traditional installment loans.
AFSA is pleased to participate in the field hearing in Kansas City, MO, today and will be submitting a formal comment on the proposed rule.
June 2nd, 2016 by AFSA