CFPB says it will consider eliminating credit card late fee safe harbor

The Consumer Financial Protection Bureau said it plans to assess whether to eliminate the credit card late fee safe harbor under Regulation Z.

What the Bureau Said: As reported by Bank Reg Blog, the CFPB said in the Biden administration's latest agenda of regulatory actions that it “will assess the efficacy of the regulatory landscape and whether the regulatory safe harbor is outdated and should be eliminated.”

CFPB Late Fee Rule: The CFPB in March issued an ICBA-opposed rule that would cut the credit card late fee safe harbor under the CARD Act from the current levels of $30 for the first violation to $8, without inflation adjustments. The rule would apply to issuers with 1 million or more open accounts.

Court Injunction: A federal judge in May issued a temporary injunction of the CFPB rule shortly before it was set to take effect, pending a Supreme Court decision on the constitutionality of the CFPB’s funding structure. As reported by Reuters, the CFPB this week asked the judge to dissolve the injunction following the high court’s ruling in May that the bureau’s funding structure is constitutional.

ICBA View: In a national news release after the CFPB issued the rule earlier this year, ICBA said the rule sends the wrong message that punctual credit card payments are not a significant priority, which will harm consumers by leading to more late payments and additional interest charges.

More: Also in the Biden administration’s regulatory agenda:

The OCC said September is its target date for finalizing its proposed policy statement on bank merger transactions.

The FDIC listed December as the target date for finalizing corporate governance rules for banks with $10 billion or more in total assets.

The FDIC said it intends to amend the scope of its regulation governing industrial loan company parent companies.

The Federal Reserve said it is working to finalize its proposed Regulation II debit card interchange amendments by January.