NEWS: The Consumer Financial Protection Bureau (CFPB) issued a final rule that amends rules related to disparate impact discrimination, discouragement of applicants or prospective applicants, and special purpose credit programs under Regulation B (which implements the federal Equal Credit Opportunity Act or ECOA). We published a comment call in November 2025 focusing on these changes that would affect credit unions. This final rule will be effective July 21, 2026.
Highlights of the rule are:
- Disparate Impact: All disparate impact (effects test) references are removed from Reg. B and the commentary.
“Disparate impact” refers to a practice in which a creditor applies a lending policy or practice uniformly to all credit applicants, without any intent to discriminate; however, that policy or practice disproportionately excludes or burdens certain applicants based on a protected classification – in effect, causing discrimination.
Enforcement will focus on intentional discrimination, which remains prohibited under Reg. B.
Fair lending obligations are not being eliminated from Reg. B, but the new amendment shifts how risk will be evaluated and managed. While it removes disparate impact as a basis for liability under the ECOA, it places increased importance on how lenders document, justify, and consistently apply their credit decisions. We will update The League’s Regulation B ii Release No. B041 accordingly.
As you know, the National Credit Union Administration (NCUA) removed all references to disparate impact liability from its Fair Lending Guide and other reference materials. We explained that the NCUA will no longer review for disparate impact in this Compliance Courier.
- Application Discouragement: The change narrows the scope of what constitutes discouraging a borrower from applying for credit:
- Limited to “oral or written statements” or visual images.
- Must be “directed at” applicants or prospective applicants – a statement is discouraging only if the creditor knows or should know that it would cause a reasonable person to believe the creditor would deny, or grant on less favorable terms, a credit application because of the person’s prohibited basis characteristics.
- Special Purpose Credit Programs (SPCPs): The amendment restricts what for-profit creditors can do. Credit unions are only subject to the SPCP rules for not-for-profit organizations. As a result, this part of the rule should not affect credit unions.
Compliance Roundtable – September 16 (In-Person)
Join members of The League’s compliance team as they lead a discussion on the latest changes in regulations and need to know information to keep your credit union in compliance. You can find more information or register on our website.