Online Lenders Alliance Statement on CFPB Small Dollar Rule
WASHINGTON, DC – February 7, 2019 – The Online Lenders Alliance (OLA) released the following statement in response to the Consumer Financial Bureau’s (CFPB) plans to revisit parts of the Small Dollar Rule.
“We support a well-regulated market, based on fact and industry reality, and we support CFPB and other regulators efforts to drive out bad actors and protect consumers. However, the recently published CFPB proposals to fix the problem with its previously issued small dollar lending rule is about more than just payday loans. It is about the fintech industry’s ability to help provide access to credit for the millions of American borrowers who are often locked out of credit from traditional financial institutions. We know this because our diverse membership includes not only lenders, but also alternative credit bureaus, lead generators and software developers — the entire fintech community.”
“For online lenders today, ability to repay standards are in use and are fundamental to successful lending. OLA members have led the industry in new innovations that balance ability to repay underwriting standards with the convenience and access consumers expect. After all, lenders know best that if borrowers don’t repay loans, lenders go out of business. Today, our members offer a host of tailored credit products to meet a wide range of consumers’ personal financial situations. The vibrant growth in non-bank lending and fintech companies demonstrates our success in delivering good customer experience and sustainable business models.”
“We believe the rule as written, and the proposal, still reinforce the institutional bias in our banking systems against non-prime rated consumers – setting different standards for them in applying for loans and making payments, in particular, the payment requirements are unique and different than accepted industry practices promoted and enforced by NACHA and other managers of payment systems. This rule uses data collected in a different era, before changes were made to NACHA standards strengthening the performance standards and penalties. It’s time to take another look at the payments portion of the rule in light of those changes. As the rule stands, it likely will do more harm to the very populations it strives to protect by setting special standards for those individuals when they attempt to access credit.
We are committed to working with both House Financial Services Committee Chairwoman Maxine Waters and CFPB Director Kraninger in making sure we do not lock-out the millions of Americans that deserve access to credit.”
Online Lenders Alliance (OLA) is the first trade association in FinTech. OLA is focused on credit inclusion, bringing together a diverse group of innovative companies who share a common goal: to serve hardworking Americans who deserve access to trustworthy credit. Our members are entrepreneurs, publicly-traded companies, lenders, credit bureaus, advertisers, lead generators, compliance professionals, and software developers who are leveraging technology to responsibly improve consumers’ financial health. Consumer protection is our top priority and OLA members abide by a rigorous set of Best Practices and Code of Conduct to ensure consumers are fully informed and fairly treated.