On September 30, 2016, the Consumer Financial Protection Bureau (CFPB) published the procedures its examiners will use when examining financial institutions for compliance with the amended Military Lending Act (MLA) regulations. The amended regulations became enforceable on October 3, 2016, for creditors other than credit card providers.
The updated procedures call for CFPB examiners to look at whether an institution is complying with the various regulatory requirements including: providing specific disclosures; correctly calculating the Military Annual Percentage Rate; accurately identifying covered borrowers and transactions; and maintaining appropriate records. Examiners will also determine whether loan agreements are imposing prohibited conditions, such as requiring post-dated checks or military allotments, or require prepayment penalties. In addition, institutions will need to show that their staff have received sufficient education in their responsibilities with respect to the new MLA regulations.
In the press release announcing the examination procedure update, the CFPB stated that it would “exercise its enforcement authority in appropriate cases of substantial consumer harm.”