In preparation for the final enactment of the CFPBs Small Dollar Lending Rule, VP Compliance Services is performing Small Dollar Readiness audits. Our findings will provide lenders with a gap analysis detailing elements of the lending program that are out of compliance and must be corrected before the rule becomes final.
The audit will examine the following areas:
Policies:
Underwriting:
- Update policy to reflect loan types (short term greater or less than 60 days)
- Update policy to reflect applicable protection and prevention requirements
- Update procedures to reflect adherence
FCRA:
- Update policy to reflect reporting requirements
- Update procedures to include reporting, complaints and usage
Payment Processing:
- Update policies with checking account attempt requirements
- Update procedures with tools to prevent and identify
Record Retention:
- Update to include documents covered by changes
Training:
- Update to include changes from small dollar lending program.
Additional Audit Items:
Prevention and Protection Requirements:
- Review and sample outstanding accounts to identify potential violations of 12 month restrictions, 30 day cooling off, etc.
- Review scrubs performed by credit bureaus to ensure credit bureaus include all underwriting requirements (multiple loans, ability to repay/full payment test, other negative loans, etc.)
- Review application to ensure adherence (possible recommendation to include self declaration by applicant)
- Review Underwriting, Record Retention and FCRA policies for changes to policy and the addition of procedures.
- Controls in place to prevent violations of each requirement (Review each for sufficiency)
- Verify tracking of changes incorporated into change management program.
- Test outgoing credit reporting via sample to ensure reporting requirements are met.
- Verify changes to training program
Payment Processing Requirements:
- Verify policy changes
- Request and verify controls
- Review account samples for multiple payments (request delinquent accounts to narrow focus)
