The Federal Reserve Board (Board) issued a proposal to repeal Regulation AA, which is the Board’s rule prohibiting certain unfair or deceptive acts and practices (UDAP), including certain credit practices. Among other things, Regulation AA regulates certain provisions and remedies in consumer credit contracts, requires certain disclosures with respect to cosigner’s obligations and liabilities, and prohibits the pyramiding of late fees.
The Board’s proposal to repeal Regulation AA, however, is largely a matter of regulatory housekeeping. Simultaneous with the Board’s proposal, the Board and the other federal banking agencies issued joint interagency guidance, which clarifies that the repeal of Regulation AA does not mean that creditors are permitted to engage in conduct prohibited by Regulation AA, as the agencies still intend to enforce the prohibition on UDAP, independent of whether such acts or practices are specifically identified by regulation. In this regard, the repeal of Regulation AA may actually broaden the agencies’ views on the types of credit practices that could represent UDAP. For additional information, see our client alert on this topic.