Lenders, Get Ready: You Have 4 Months to Comply With New CFSA Best Practices
We’ve written quite a lot about best practices here on the blog: best practices for employee onboarding, best practices for termination, anti-harassment best practices, FCRA compliance best practices, and so on and so forth. It’s not that we’re trying to reach the top of a list of search results for “best practices”; it’s because these sorts of topics are fundamental to workforce compliance, particularly in highly regulated industries such as consumer lending and automotive. Beyond understanding the rules and regulations you need to comply with, your organization should also know the most efficient and effective ways to ensure and prove compliance.
But here’s the thing about best practices: sometimes they’re more than recommendations or guiding principles. Depending on the associations your organization affiliates with, certain best practices may be operational requirements. In other words, you have no choice but to be the best.
“In addition to full compliance with all state and federal laws and regulations, CFSA requires its members to abide by a strict set of mandatory best business practices. These best practices are intended to cover all small-dollar loans provided by CFSA member companies, including payday advance, automobile title, and installment loans. Compliance with mandatory Best Practices is just one way in which CFSA member companies set themselves apart from others in the small-dollar lending industry.”
Such is the case for lenders who belong to the Community Financial Services Association of America. CFSA’s website states:
If your company is a CFSA member, you may want to know that this strict set of mandatory lending procedures just got updated. In July, the association released a new, “modernized” list of Best Practices. The new set contains 2 more provisions (for a total of 15, up from 13 before), as well as “substantive changes, technical adjustments, or both” to several existing Best Practices.
New requirements and changes include the following:
- a new “Ability to Repay” Best Practice
- a new “Maintaining Privacy” Best Practice
- updated “Customer Notice” language in the “Encourage Consumer Responsibility” Best Practice
- wider scope for the “Extended Repayment Plan” Best Practice, which now covers all small-dollar loans
- a broader “Licensing/Registration” Best Practice that now“expressly require[s] [members] to be registered with all government agencies (local, state, and federal) and to hold all necessary businesses licenses so that they operate legally in the jurisdictions in which they offer small-dollar loans”
These new requirements have an effective date of January 1, 2019, meaning you have just a few months to update your programs. You can find more information at cfsaa.com.
Fortunately, in addition to writing blog posts about these best practices, Compli makes it easy to implement a compliance management system that stays up-to-date with all state, federal, and industry requirements your business may face. In fact, you could say that’s the main thing we do. Check out our platform and try out a demo for yourself here.
