CFPB Won’t Recommend OppFi Coercive Action, Lender Says
Consumer Financial Protection Bureau (CFPB) will not recommend enforcement action against loan manager OppFi, company said in a Securities and Exchange Commission (SEC) Monday deposit.
OppFi said the regulator has informed the company that it has completed its investigation into whether the company’s practices violate the Military Loans Act (MLA).
OppFi disclosed the investigation, which arose out of a consumer complaint in March ahead of a planned merger with FG New America Acquisition Corp., a blank check company run by former TD Ameritrade chairman and CEO Joe Moglia.
The company, at the time, said it had already provided redress to customers who were affected and responded to CFPB to “refute the number of consumers affected”, American banker reported.
“As a company, we have established strict lending practices and compliance standards,” an OppFi spokesperson said to the publication on Monday in an emailed statement, adding that “we appreciate the opportunity. to work with the CFPB to bring clarity, transparency and context to this matter. “
The CFPB issued an interpretive rule in June, reaffirming its authority to screen lenders for potential violations of the AMLA, which caps the interest rate that lenders can charge military borrowers on consumer loans at 36%. (However, OppFi offers installment loans with annual percentage rates above 36% to non-military borrowers.)
The regulator stopped conducting reviews in 2018 under Trump-era Acting Director Mick Mulvaney on the grounds that the law granted CFPB enforcement power but not oversight power. The problem was the lack of specific language in the AMLA regarding the supervisory authority. The CFPB said in June that the omission did not exclude exams so much as it left them room.
Without reviews, the CFPB had been relegated to using formal investigations – such as the OppFi probe – to monitor compliance with mutual legal assistance. The office, in its June decision, said the process leads to “unnecessary inefficiencies.”