No-action letter template to the bank policy institute

Bank Policy Institute

600 13th Street NW, Suite 400

Washington, D.C. 20005

This letter is in response to an application for a No-Action Letter Template (Application), filed with the Consumer Financial Protection Bureau (Bureau) by the Bank Policy Institute (BPI) that could serve as the basis for No-Action Letter applications by BPI members and other deposit-taking institutions subject to the Bureau’s supervisory and enforcement authority (DI Applicants)1 that intend to offer a standardized, small-dollar credit product as described in the Application (Proposed Product). The Application describes the general structure and features of the Proposed Product. Some of the features are quite definite, functioning as guardrails2 that should be included in all versions of the Proposed Product. The Application explains that DI Applicants would design a version of the Proposed Product that includes the guardrails, but also would provide further specific information regarding the precise nature and details of the individual version of the Proposed Product they intend to offer, including the manner in which it would be offered and provided. Such specific details would depend on a variety of factors, including the financial institution’s business strategy, risk tolerance, underwriting criteria, and customer needs.

The Bureau has considered and grants the Application, and accordingly issues this No-Action Letter Template pursuant to the Bureau’s Policy on No-Action Letters (Policy). The Bureau intends to grant applications from DI Applicants for a No-Action Letter based on this No-Action Letter Template under section E.1.b of the Policy, in appropriate cases. In general, such applications should include the information specified in section A of the Policy. An application should also include the certifications relating to the Proposed Product guardrails and the information about features and practices specified below.3 Under the Policy, each No-Action Letter has a limited scope. The Policy uses the term “described aspects of the product or service” to capture this scope, allowing applicants to describe both the product or service in question, and the manner in which it is offered or provided.4 Accordingly, in determining the scope of a potential No-Action Letter issued in response to an application based on this No-Action Letter Template, the Bureau will evaluate the adequacy of the description of the DI Applicant’s product (Applicant’s Product) contained in the application.5

The Application documents that, at least as early as 2008, Federal financial regulators have been encouraging depository institutions to engage in responsible small-dollar lending through various statements and guidance documents. The Bureau’s issuance of this No-Action Letter Template is intended to complement these expressions of encouragement by providing a mechanism through which DI Applicants may obtain a No-Action Letter from the Bureau that addresses the application of the prohibition on unfair, deceptive, and abusive acts and practices6 to described aspects of their particular small-dollar lending products. The Bureau will review each application submitted under this No-Action Letter Template. Granting this No-Action Letter Template does not obligate the Bureau to issue any No-Action Letter that the Bureau believes would not improve the options available to consumers within the market for small-dollar credit products.


[1] In light of the limitations on the Bureau’s supervisory and enforcement jurisdiction set forth in Dodd-Frank Act section 1026, the term “DI Applicant” is limited to insured depository institutions and insured credit unions with total assets of more than $10,000,000,000 and affiliates of such entities that are themselves insured depository institutions or insured credit unions. 12 U.S.C. 5515, 5516.

[2] Some of these guardrails may extend beyond the requirements of applicable laws and regulations. The inclusion of any particular guardrail should not be interpreted as a statement by the Bureau that small-dollar credit products must contain such guardrails to avoid violating the law.

[3] Applications can address intended products or products already in market.

[4] See section C.2 of the Policy.

[5] For example, as noted below, if a DI Applicant wished to have particular marketing materials included within the subject matter scope of a potential No-Action Letter, the DI Applicant would need to include those materials in its application.

[6] 12 U.S.C. 5531, 5536.