CFPB Issues Interpretive Rule on MLA-Related Examination Authority

The CFPB recently published an interpretive rule reasserting its authority to examine supervised financial institutions for Military Lending Act (MLA) violations and explaining the legal basis for such authority.  The new interpretive rule, effective June 23, 2021, resumes the CFPB’s examination activity that was discontinued in 2018.

From 2013 to 2018, the CFPB conducted examinations of various supervised entities for risks to active-duty servicemembers and their covered dependents from conduct that violates the MLA.  It discontinued the MLA-related examination activity in 2018 when, under new leadership, the CFPB changed its position, determining that it did not have the requisite authority to perform the examinations.  In 2019, the CFPB sent a legislative proposal to Congress to clarify the CFPB’s authority by amending the Consumer Financial Protection Act of 2010 (CFPA) to provide express statutory authority to supervise for compliance with the MLA, but the legislation has not been enacted.

In this recent interpretive rule, the CFPB provides that it is no longer persuaded by the previous leadership’s interpretation of the CFPA, and now reasserts its authority to conduct MLA-related examinations of supervised financial institutions.  The CFPB believes its examinations will help protect military borrowers from predatory lenders by detecting and assessing risks before MLA violations occur.

The CFPB’s announcement regarding the interpretive rule, including links to additional information about the MLA and the CFPB’s related involvement, can be found here.