Today at the CFPB’s field hearing on payday lending, the Bureau announced the publication of its Short-Term, Small-Dollar Lending Procedures – a field guide CFPB examiners will use to make sure payday lenders – banks and nonbanks – are following federal consumer financial laws.

“We recognize the need for emergency credit. At the same time, it is important that these products actually help consumers, rather than harm them,” said CFPB Director Richard Cordray in his opening remarks at today’s field hearing. “Now, the Bureau will be giving payday lenders much more attention.”

Here’s an excerpt from the Bureau’s announcement:

With the establishment of the CFPB, a federal agency for the first time can supervise not only bank payday lenders but also all nonbank payday lenders. Specifically, the Short-Term, Small Dollar Lending Procedures describe the types of information that the agency’s examiners will gather to evaluate payday lenders’ policies and procedures, assess whether lenders are in compliance with federal consumer financial  laws, and identify risks to consumers throughout the lending process.  The procedures track key payday lending activities, from initial advertisements and marketing to collection practices.

The CFPB will be implementing its payday lending supervision program based on its assessment of risks to consumers, including consideration of factors such as the volume of business and the extent of state oversight.  The CFPB also will be coordinating with federal and state partners to maximize supervisory capability and minimize regulatory burden.  If a violation of a federal consumer financial law has occurred, the CFPB will determine whether supervisory or enforcement actions are appropriate.

In general, CFPB supervision will include gathering reports from and conducting examinations of bank and nonbank activities.  The examination process will begin with scoping, review of information, and data analysis followed by onsite examinations.  The CFPB will be in regular communication with supervised entities, and it will conduct follow-up monitoring.

To download the Manual, click here.