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Board Report: 2013-AE-B-008 July 1, 2013

Board Should Enhance Compliance with Small Entity Compliance Guide Requirements Contained in the Small Business Regulatory Enforcement Fairness Act of 1996

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Appendix C Detailed Results of Review

The following describes in more detail our observations concerning each of the major regulations amended that support our overall assessment of the Board's compliance with SBREFA. Each of the rules discussed below, with the exception of Regulation GG, was determined to have a significant impact on small entities as a result of the Board's FRFAs.

Regulation Z, Truth in Lending

Our sample contained four rules that amended Regulation Z. The Board's public website contains a compliance guide for Regulation Z. However, the guide only addresses the loan originator compensation rule (the subject of the OIG Hotline complaint) and does not address the various consumer lending activities covered by Regulation Z. The guide explains the definition of a loan originator as well as who is not considered to be a loan originator. The remainder of the guide explains record retention and prohibited acts or practices.

Regulation AA, Unfair or Deceptive Acts or Practices

Our sample included a rule amending Regulation AA that is specifically related to consumer credit card accounts. The Board published an overall Regulation AA guide that describes the regulation section by section and includes a link to staff guidelines on the credit practices rule and another link to interagency guidance on the topic. As mentioned above, this final rule was ultimately withdrawn.

Regulation E, Electronic Fund Transfers

The rule in our sample amends Regulation E to limit the ability of a financial institution to assess overdraft fees. The Board's compliance guide for Regulation E summarizes each section of the regulation and lists the appendixes' titles, but does not explain how a small entity should comply with the regulation; the guide simply restates and summarizes each section of the rule.

Regulation P, Privacy of Consumer Information

Regulation P was promulgated prior to the 2007 amendment to SBREFA. However, we decided to review the compliance guide that was created for it because the guide appeared to provide more information in a narrative format as opposed to many of the guides in our sample. The guide defines important terms used in the rule, explains the categories of information related to the rule and, among other topics, when and how to provide notices. The purpose of the document, as explained in the guide itself, is to help financial institutions within the Board's primary jurisdiction comply with Regulation P.

The Regulation P guide represents, in our opinion, the type of narrative treatment that provides easy-to-understand guidance for small entities and that reflects consistency with the spirit of SBREFA. In addition to the guide, we noted that the Board developed frequently asked questions to further assist financial institutions in complying with Regulation P. The frequently-asked-questions document identifies specific types of financial institutions and consumer groups and explains how Regulation P applies. For example, one of the questions posed in the document clarifies whether a small bank that contracts with a large bank for its credit card operations would have to provide the customer with the initial privacy notice.

Regulation GG, Prohibition on Funding of Unlawful Internet Gambling

A final rule amending Regulation GG, which was in our initial sample, was not included in our final sample because the Board's FRFA determined that there would not be a significant impact on small entities. However, we decided to review the compliance guide because of its unique question-and-answer format. The questions help clarify which small entities are subject to the rule. We viewed this approach as a possible model for future guides.