It seems likely that the CFPB will follow the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) and convene a Review Panel as the next step in the debt collection rulemaking process. However, as of this date the CFPB has not made any formal announcements about the formation of a SBREFA panel for debt collection.

Under SBREFA, when developing rules that may have a significant economic impact on a substantial number of small businesses, the CFPB, in conjunction with the Small Business Administration (SBA) and the Office of Management and Budget (OMB), is required to form a Review Panel to obtain input from a group of small business representatives. The Panel is selected by the CFPB in consultation with the SBA.

The Panel then meets with the selected group of representatives from small business (Small Entity Representatives or SERs). The SERs provide the Panel with feedback on the potential economic impacts of complying with any proposed regulations.

For further guidance on what this means we found the following on the CFPB website regarding the use of a SBREFA Panel during the mortgage rulemaking process.

The CFPB is mindful that new statutory requirements we are implementing can burden as well as benefit small financial services providers. We use many methods to reach out to small providers to find out if any of these burdens are unnecessary and, if so, how we may be able to reduce them (within the limits of our statutory authority, of course). One method we will sometimes use is the Small Business Review Panel under the Small Business Regulatory Enforcement Fairness Act (SBREFA). In certain cases, this Act requires us to form and chair a panel alongside representatives of the Small Business Administration (SBA) and the Office of Management and Budget. That panel will meet with a group of representatives of the small providers directly affected by the new requirements.

We expect the number of representatives will generally be around 15-20. They will provide feedback on the options we’re considering and on alternatives to minimize negative impacts. Within 60 days of convening, the panel will complete a report on the issues, including input they receive, their findings on the economic impacts of the proposal, and any alternatives that achieve the proposal’s objectives while minimizing unnecessary burdens. The Bureau will then consider the panel’s input in preparing the proposed rule.

The CFPB also recently convened a SBREFA panel in the Payday//Title/Installment Loan rulemaking process. (Note: That Panel consisted of 27 SERs.)  For some guidance on timing, we can look to the timeframe in that case.

On March 26, 2015 the CFPB issued a Press Release, Fact Sheet and Outline of the proposals it was considering.  The formation of the SBREFA Panel was mentioned in those documents.

On April 29, 2015 the panel met in Washington, D.C. After the meeting the SERs were given 15 days to submit written submissions and the CFPB will then have 45 days to finalize a report to the SBREFA Panel.

insideARM believes the SBREFA Panel will provide an important opportunity for representatives to impact the debt collection rulemaking process. The costs of compliance continue to grow. The CFPB must hear from industry experts on the financial impact of any proposed rules.

insideARM also believes that the CFPB will consider nominations for participation in the process.  To be considered the SER must be a “small business” in size as defined by the SBA. The definition varies by industry. For the ARM industry the definition is “less than $15 million in annual revenue”.

It is expected that ARM industry groups such as The Consumer Relations Consortium (CRC), NARCA, DBA and ACA International will all be suggesting potential SERs to the CFPB.

The ideal candidate would have the following attributes:

  1. Has a solid reputation for compliance in the industry
  2. Is willing to spend the time and resources necessary to participate in the Panel (we believe the time commitment would be some conference calls prior to a face-to-face meeting and then a trip to Washington, D.C. for a hearing)
  3. Has smart, articulate, and progressive leadership

As noted above, the CFPB has not yet made any announcement regarding a SEBREFA Panel in connection with debt collection rulemaking. The insideARM team believes that we are still could be several months away from any such announcement. However, in our opinion, the industry should anticipate the action and be prepared to engage in the process.


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