PROTECTING VULNERABLE CLIENTS INDUSTRY NEWS
CFPB Will Reconsider Payday Rule By Bram Berkowitz
The Consumer Financial Protection Bureau intends to engage in a rule-making process to reconsider the Payday Rule, which could result in a full repeal or significant revision. A payday loan is a small, short-term and unsecured loan, typically with high rates that must be repaid in a few weeks or typically on the borrower’s next payday, hence the name. The products have received criticism for squeezing borrowers already in tight financial situations. The proposed payday rule would require lenders to determine upfront whether people can afford to repay the loans. The decision to try to revise or repeal the rule illustrates the dramatic shift in the consumer watchdog agency since President Donald Trump named Mick Mulvaney as director. Sen. Elizabeth Warren, who helped create the CFPB, immediately blasted the decision to reconsider the rule. Other organizations also came out against the decision, but not all were opposed. “Under the current rule, many banks are forced to sit on the sidelines and prevented from offering affordable and popular small-dollar credit options to help meet the needs of their customers,” Hunt added. “As the CFPB reconsiders this rule, we encourage the Bureau to work with bank regulatory agencies to examine the use of bank-offered small-dollar lending products, such as deposit advance products, and ensure any final rule treats all banks equally.” The rule technically went into effect Tuesday, but the CFPB said most of it would not be enforced until August 2019.
Citizens Bank Launches New P2P Service Citizens Bank recently announced the launch of a new person-to-person platform through their mobile and online banking apps. Zelle allows customers to transfer funds from one bank account to another in minutes, using only a recipient’s email address or mobile number. Customer account information stays protected as neither party can see the other’s account information. “The needs of our customers continue to evolve and we are pleased to leverage innovative digital technologies that create better end-to-end experiences in the areas that matter most,” Beth Johnson, chief marketing officer and head of virtual channels at Citizens Bank, said in a statement. “We want to be 22 BANKING NEW ENGLAND
the first place our customers turn when they need to send or receive money, and becoming part of the Zelle network will allow us to deliver a convenient, userfriendly P2P payments experience.” Using either the latest version of the mobile banking app or Citizens Bank online banking, users can look for and select “send money with zelle.” From there, users can follow the enrollment steps. Consumers using Zelle can send money to almost anyone with a bank account in the United States who is registered with Zelle. This offering continues Citizens Bank’s digital innovations, having recently introduced a digital advisory service called SpeciFi from Citizens Investment Services to offer customers integrated banking and digital investment services. The bank, through its partnership with Fundation, also recently announced a new digital lending capability available to small businesses.
Citigroup Taking Steps to Provide Gender and Ethnicity Wage Data
Citigroup and Arjuna Capital said in a statement yesterday that Citi is taking steps to provide gender and ethnicity wage data in an effort to help closing the pay gap, making it the first U.S. bank to respond to shareholder concerns. In response to Citi’s steps, Arjuna Capital withdrew its gender pay shareholder proposal that it had submitted to Citigroup Inc. on Nov. 13, 2017 regarding gender pay equity submitted under Rule 14a-8 for inclusion in Citigroup’s 2018 proxy statement on behalf of Hilda Toth Maibach. Citi’s announcement represents a major shift for U.S. banks and credit card companies, since no financial services company so far targeted by shareholders for gender pay has taken such action. Bank of America, MasterCard, American Express, JP Morgan, Wells Fargo and Citi all rejected proposals in 2017 asking for detailed reports on the percentage pay gap between male and female employees across race and ethnicity, including base, bonus and equity compensation, policies to address that gap, the methodology used and quantitative reduction targets. To date, Citi is the first bank targeted to respond with quantitative reporting. Arjuna Capital, which in 2016 succeeded in getting seven tech companies to disclose their gender pay gaps, filed nine shareholder proposals for the 2018 proxy season, asking Citibank, J.P. Morgan, Wells Fargo, Bank of America, Bank of New York Mellon, AmEx, Mastercard, Reinsurance Group and Progressive Insurance to publish the companies’ policies and goals to reduce the gender pay gap. BNE