On July 21st the FCRA will be updated to require disclosure of credit scores in Risk Based Pricing Notices.

If we use the Alternative Notice do we have any changes to make?

Huh? Are you talking about the proposed amendments to Regulation B?

From Bankers Compliance Consulting June 2011 Issue:

Regulatory Changes Effective July 21, 2011
Regulation V
The Fair Credit Reporting Act will be updated to require disclosure of credit scores in Risk Based Pricing Notices.

Might have to ask David??

beegee, would you please post the answer to your question?

AllSmiles - when I secure an answer I will post. thanks - beegee

The Board has proposals out to amend Regs B and V to incorporate FCRA amendments made by DFA effective 7/21/11. The proposals were published on March 15, with comments due by April 14. The Fed and FTC (which published proposed changes in connection with the Reg V proposal) stated that they want to have final rules in place by July 21 to ensure that "consumers receive consistent disclosures of credit scores and information relating to credit scores" and to "help facilitate uniform compliance when" the DFA provisions become effective on 7/21.

The proposed changes do not affect the exception notices (H-3, H-4 and H-5). New versions of the H-1 and H-2 containing credit score information will be designated as H-6 and H-7. The changes to adverse action notices in Reg B came from the same section of Dodd-Frank as the changes to Reg V and both proposed rules were issued at the same time.

So if you use the exception notices you wouldn't need to change those, but you still need to be aware of the adverse Action notice changes.

Will there be a final notice rule on this or should we just make the change now (Adverse Action Notices)?

I have the same question as above. Will there be a final rule or do we just need to go ahead and make the change. And if we need to go ahead and make the change, are there updated "sample forms" (Reg B Appendix C)?

Final rules are planned, but today is one month from the transfer date and they're not out yet. The proposed rule did show updated sample forms C-1 through C-5.

With an effective date of 7/21 does that mean with all applicable AAN issued as of that date or does it apply to applications taken that day and subsequently denied?

Do we need to include this additional information on our adverse action when we deny a deposit account? or does this just apply to credit denials? Our software vendor has updated our adverse action notices on DepositPro, that's why I'm asking.

The changes to the FCRA section 615(a) will require the FCRA portion of the disclosure anytime you use a credit report with a score and take adverse action. You would not use the models in Regulation B for this, as there is no credit involved.

Surprisingly, the Regulation V amendments only addressed the credit issue. This is a big oversight I believe.

Thanks!

Even though Reg B is for credit extensions, section 615(a) and 615(b) of the FCRA require credit score disclosure for adverse action on the basis of information contained in consumer reports. This requires credit score disclosure for ANY adverse action taken. This would include denying consumers a checking account, or even denying an applicant a job, if an adverse action is based in whole or in part on a credit score based on a consumer report.

The reg B notices only cover adverse notices for extensions of credit. I would be curious to see what the vendor adverse notices for Deposit Pro look like. I also have not seen the notices for employment adverse action.

In reading 1100F it indicates that the FRB will amend the model notices C-1 through C-5 to incorporate the additiional content requirements. Has this been done???? I have not been able to find them if so.

"In reading 1100F it indicates that the FRB will amend the model notices C-1 through C-5 to incorporate the additiional content requirements."

I've that section many times and I don't see anywhere that it indicates anything about amending the modules.

However, the final regulations to amend Regulation V were issued today with updated models:

http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20110706a1.pdf

I just read the 98 (60 plus 38) pages. My understanding is you cannot attach the risk based pricing exception disclosure to the Notice of Action Taken. You do, however, use that exact info and populate the Notice of Action Taken. It is the exact information from the credit report that is used in the credit decision,although the commentary says it is obtained at a different time (when the app is taken) then when the adverse action is provided. You do not obtain a second credit report or score. The same data is provided both at application and on the adverse action form, just in a different format. Go figure.

And I need clarification on providing a Notice to both applicants (joint application) stating that an application is denied for delinquent credit obligations even though one applicant has delinquent credit and a lower credit score and the other does not have delinquent credit and has a 800 Credit Score. The denial reasons relate to the application, not to the borrower. Only the Credit Score information relates to a specific borrower. The borrower with the 800 Credit Score, per the commentary, is supposed to know either the delinquent credit related to the other borrower, or is supposed to ask the lender. Not too confusing. And it is going to be fun explaining the delinquent credit of one applicant to the other.


There is a detailed discussion of this on pages 13, 14 and 15 of the FRB issuance of the final rule. They explain why the notices must be separate and cannot be combined and why the exception notice for risk based pricing cannot be used instead of the notice in the AAN notice.

Also, is there a delay of 30 days for implementation?

The rules are effective 30 days from the date that the final rule is published in the Federal Register which will probably happen next week.

But...but....

this thread

Because the regulators didn't get the final rules out until yesterday, there will be a different effective date for the rules (30 days from publication) than for the statute (July 21). So there will be a short period of time in which the requirement is effective but the rules on implementing it are not.

Ted, that was my take as well, but i'm not really sure what that means exactly. That part of the DFA is effective, but the rule isn't til later. Seems we still would have to comply as of July 21....right?

I think it means that the general obligation to give the new information begins on 7/21 but the details given in the regulation won't be officially in place until August.

ABA's opinion.....

Compliance Date for Adverse-Action Notices Rule Is July 21
The final rule the Federal Reserve issued Wednesday that amends certain model notices in Regulation B (Equal Credit Opportunity) related to adverse-action notices becomes legally effective on July 21, not 30 days after its publication in the Federal Register, ABA staff experts said. The rule revises the model notices to incorporate the new Dodd-Frank Act credit-score disclosure requirements.

ABA is currently developing a staff analysis on that rule and also the related Fed and Federal Trade Commission joint final rules that implement Dodd-Frank Act provisions requiring creditors to disclose credit scores and related information to consumers in risk-based pricing and adverse action notices if such scores were used in setting the credit terms or taking adverse action.