In preparation for the final enactment of the CFPB’s 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)

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