This content was published prior to the combination of Dentons Sirote. Learn more about Dentons Sirote. 

Last week, I wrote about the proliferation of federal regulations in the consumer finance industry. See here.

That blog was influenced by the adoption of the CFPB’s most recent rule addressing high cost loans—Payday, Vehicle Title, and Certain High-Cost Installment Loans Rule (“Payday Rule”). In the blog, I mentioned and reflected upon the change in the nature of federal regulations over the years from what was once a pretty straight forward regulatory statement of “do’s and don’t’s” to what is now a very sophisticated and complex set of regulatory requirements for the consumer finance industry to follow. There is no better example than to compare the relatively old Federal Trade Regulation Rules on Door-to-Door Sales or Credit Practices, to the newest Payday Rule that I covered here and here. If you take a few minutes to do that, you will readily see what I am talking about.

While I bemoan this development (because it makes it so tedious for the industry to comply with and for industry attorneys to advise on compliance), there is one good result. That is, a by-product of the more sophisticated regulations is the willingness of regulators to offer “sample forms” for compliance.

Beginning several years ago, federal regulators accelerated the trend to offer sample forms as appendices to their regulations; and, they offered a “safe harbor” for use of such forms. So, in many of the federal regulations, we now find a sample form or sample language that can be used with latitude to immunize creditors from disclosure violations. From Regulation Z under the Truth-in-Lending Act to the latest CFPB Rule on High Cost Loans, the regulations now offer sample forms and sample language that are designed to meet the disclosure requirements of the subject regulations. While use of such forms is not mandated, often use does provide a safe harbor for the creditor. And, that is why the use of such offered forms and language is so important.

Practice Pointer:  Check the multitude of forms that are used in your offices. Make certain that they are the ones offered by the rules and regulations that afford you a compliance safe harbor. Taking this inventory now may save you a lot of aggravation in the future.