The Consumer Financial Protection Bureau has pushed back three key rulemakings - including the highly anticipated proposal on payday lending - until next year.
The agency's recently released semi-annual agenda said it anticipated it would issue proposals on overdraft protection, debt collection and payday lending sometime in the first seven months of 2015. That means those three rules likely won't be finalized until 2016 if they stay on the current track.
It also indicates the industry will get a temporary reprieve from new CFPB regulations after a busy year in which the agency implemented a slew of mortgage rules, heightened its oversight of auto lenders and proposed rules governing prepaid cards.
"The CFPB has undertaken a considerable amount of rulemaking initiatives since opening its doors," said Isaac Boltanksy, an analyst at Compass Point Research & Trading, in a note to clients this week. "While we are unsure of the exact reason why these rules have been delayed, our sense is that the CFPB's rulemaking efforts in these specific markets have been slowed by a lack of data, the capacity constraints caused by other rulemaking initiatives, and the growing pains that come with building a new agency."
A CFPB spokesman said the agency's timeline "reflect the CFPB's best estimates at the time" it submits its unified agenda to the Office of Management and Budget.
In reality, it is difficult for most regulators to meet their own tentative rulemaking projections unless there is a specific timeframe mandated by Congress, such as the Dodd-Frank Act's requirements for new mortgage rules. Even in cases with statutory deadlines, it is not unusual for regulators to be late.
Boltansky estimates the other three delayed rules won't be finalized until 2016, which is significantly different from the timeline presented by the CFPB in May, when it predicted to have payday and overdraft rulemaking proposed in September and December, respectively. Those two proposals have now been pushed off twice since the fall of 2013 and based on the new projections, it will be a year behind those estimates.
The delay on payday rules is likely to draw the ire of consumer groups and some policymakers who have urged the CFPB to get out a proposal as soon as possible. In its current agenda, the CFPB says it will release a plan in February, five months later than its previous estimate.
The delay is a boon for the payday lending industry, however, which is worried the CFPB will take a harsh approach.
"The change in the CFPB's rulemaking timetable should be viewed as a positive for payday lenders including" Cash America, EZCORP and First Cash Financial, Boltansky said. "Given this update, we now believe that the CFPB is unlikely to finalize a payday lending rule until 2016 at the earliest."
The CFPB has already held hearings and published research reports on payday loans and deposit-advance products since last year.
"In addition to conducting additional research, we are evaluating what types of rules would be appropriate and warranted under CFPB authorities," said Kelly Cochran, the CFPB's assistant director for regulations, in a blog posting announcing the updated agenda. "Rulemaking might include disclosures or address acts or practices in connection with these products."
The CFPB said it would release a proposal on debt collection in April and tackle overdraft fees in July.
Boltansky said the delay on an overdraft rule was "the most notable change" to the agenda because it has already been delayed twice since last year.
"We continue to believe that the CFPB will focus on issues such as transaction reordering, general non-sufficient fund (NSF) practices, and overdraft opt-in disclosures," Boltansky said. "While we remain confident that the CFPB's future actions will pressure NSF fee revenue, we view this rulemaking delay as a significant timing development."
The delay in the debt collection proposal may be due in part to the more than 23,000 comments the CFPB received after issuing an advance notice of proposed rulemaking in November 2013. Cochran said the agency is currently trying to figure out whether debt collection rules are warranted under the Fair Debt Collection Practices Act "or other CFPB authorities and, if so, what types of rules would be appropriate."
"Rulemaking might include disclosures or address acts or practices in connection with debt collection activities," she said. "We are developing a survey to obtain information from consumers about their experiences with debt collectors and are engaged in qualitative testing to determine what information would be useful for consumers to have about debt collection and how that information should be provided to them."