Regulatory Compliance Update July 2015

Regulatory Compliance Update July 2015

By: Hickman Beckner, Vice President

The month of July was a slow month for regulatory compliance activity. Congress and the regulatory agencies observed the Independence Day holiday and have gone into a summer slowdown.

The IRS has issued the 2015 requirements for substitute documents.  The new rules make permanent the pilot program for masking all but the last 4 digits of the TIN.  Our systems do not produce substitute documents but these rules will probably be extended to all documents except 1099-A and 1099-C.

The CFPB has published the final rule that defines the scope of its supervisory authority over non-bank automobile finance companies.  The final rules give the CFPB supervisory authority over companies that originate at least 10,000 loans per year.  34 companies are expected to meet this definition.  The effect of the rules will be the finance companies will have stricter oversight and will need to provide reporting to the CFPB.

Significant Dates:

  • July 13, 2015 – Comment due on CFPB’s request for information about the student loan servicing market.
  • August 31, 2015 – CFPB begins supervision of larger auto finance companies.
  • October 1, 2015 – The new date for unified mortgage disclosures to go into effect.  The CFPB issued new rules moving the effective date from August 1. The new disclosures combine the Truth in Lending disclosures and the RESPA disclosures. 

Flood Insurance

A new final interagency rule, published on July 21, 2015, requires regulated lending institutions to escrow flood insurance premiums and fees for loans extended, increased, or renewed on or after January 1, 2016 and secured by residential improved real estate. The changes implement certain provisions of the Homeowner Flood Insurance Affordability Act of 2014.

The Federal Communications Commission and Autodialers

On June 18, the Federal Communications Commission voted in favor of a ruling which resolved 21 petitions involving a wide variety of issues regarding the enforcement and interpretation of the Telephone Consumer Protection Act (TCPA).  The ruling text was released July 10.  The ruling has significant impacts on the use of autodialer and text messaging.

Some of the highlights:

  •               Clarification of the definition of autodialer and automatic telephone dialer equipment
  •               Established liability for calling reassigned or wrong wireless phone numbers and established the threshold of one call to a wrong or reassigned number as the limit for such calls
  •               Clarified the duty of callers to establish procedures for consumer to revoke their consent through reasonable means to receive telemarketing calls
  •               Established an 89-day period to obtain prior express consent for telemarketing calls and disallowed consent obtained prior to October 2013
  •               Reiterated that a text message would be treated the same as a call under the TCPA
  •               Established that a single response to a text message does not require prior express consent
  •               Established that provision of a phone number to a HIPPA-covered provider does constitute prior consent for calls
  •               Exempted certain free informational calls from financial and healthcare providers such as fraud and identity theft alerts and appointment confirmations and reminders.

This ruling is far reaching and can have significant impacts on any organization that uses what the FCC considers autodialing equipment.

Dodd-Frank at Five Years

The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law on July 21, 2010.  Dodd-Frank has been called the most sweeping rewrite of the country’s financial laws since the New Deal.  The Act established the Consumer Financial Protection Bureau and mandated over 400 new rules for a variety of financial products as well as new regulations for financial institutions.

We at Shaw Systems have been tracking the new regulations and making many changes to provide for compliance by our clients.  Only 40% of the rules mandated by Dodd-Frank have been issued.  We still have much work in front of us.