On April 22, 2026, the Consumer Financial Protection Bureau (CFPB) took action that could reduce compliance and litigation risk for banks. The CFPB issued its final rule that amends provisions related to disparate impact, discouragement of applicants or prospective applicants, and special purpose credit programs under Regulation B, the regulation implementing the Equal Credit Opportunity Act (ECOA). The amendments clarify the compliance obligations imposed by the statute and eliminate disparate impact provisions. The final rule is effective July 21, 2026.

The final rule largely adopts the proposed rule issued in November 2025. In the CFPB’s explanation of the rulemaking, the CFPB notes that the U.S. Supreme Court (1) has not held that disparate-impact claims are available under all antidiscrimination statutes and (2) has not examined whether a disparate-impact claim is permitted under ECOA. The Supreme Court precedence only states that Age Discrimination in Employment Act authorizes disparate-impact claims and disparate-impact claims are cognizable under the Fair Housing Act. The CFPB concludes that “[the statutory] text of ECOA does not state that disparate-impact claims are cognizable under ECOA, nor does it contain effects-based language of the type that has been found in other statutes to invoke disparate-impact liability” and “[the Federal Reserve] Board’s regulations to implement [ECOA] explicitly and solely relied on [the] legislative history [of the 1976 amendments] to conclude that Congress intended for ECOA to permit an ‘effects test concept,’ i.e., disparate-impact proof of liability.”

The final rule provides that the ECOA does not authorize disparate-impact liability (effects test), further defines discouragement, and adds prohibitions and conditions for special purpose credit programs. These amendments to the definition of “discouragement” and removal of the “effects test” from the rules concerning evaluation of applications means that bank compliance under the ECOA will be viewed in a much different light.

The new rules are as follows:

  • 1002.4(b) Discouragement. A creditor shall not make any oral or written statement, in advertising or otherwise, directed at applicants or prospective applicants that the creditor knows or should know would cause a reasonable person to believe that the creditor would deny, or would grant on less favorable terms, a credit application by the applicant or prospective applicant because of the applicant or prospective applicant’s prohibited basis characteristic(s). For purposes of this paragraph (b), oral or written statements are spoken or written words, or visual images such as symbols, photographs, or videos.
  • 1002.6(a) General rule concerning use of information. Except as otherwise provided in the Act and this part, a creditor may consider any information obtained, so long as the information is not used to discriminate against an applicant on a prohibited basis. The Act does not provide that the “effects test” applies for determining whether there is discrimination in violation of the Act.

The CFPB amended Section 1002.15(d)(1)(ii) regarding the scope of privilege in incentives for self-testing and self-correction to remove the parenthetical “(including a prospective applicant who alleges a violation of § 1002.4(b)).”

The CFPB further revised the special purpose credit program provisions to expand the required information to include in a written plan in Section 1002.8(a)(3)(i) and to provide exceptions to the common characteristic provision in Section 1002.8(b)(2). Those exceptions are as follows:

(3) Prohibited common characteristics. A special purpose credit program described in paragraph (a)(3) of this section shall not use the race, color, national origin, or sex, or any combination thereof, of the applicant, as a common characteristic or factor in determining eligibility for the program.

(4) Otherwise prohibited bases in for-profit programs. Subject to paragraph (b)(3) of this section, a special purpose credit program described in paragraph (a)(3) of this section may require its participants to share one or more common characteristics that would otherwise be a prohibited basis only if the for-profit organization provides evidence for each participant who receives credit through the program that in the absence of the program the participant would not receive such credit as a result of those specific characteristics.

In Section 1002.8(c), the amendments to special rule concerning requests and use of information require that the special purpose credit program must satisfy the requirements for standards for program under Section 1002.8(a) and the controlling provisions under Section 1002.8(b). Prior to this amendment, the section only referenced Section 1002.8(a).

The CFPB also amended the official interpretations to Part 1002 for the following sections:

  • Section 1002.2(P) Empirically Derived and Other Credit Scoring Systems
  • Section 1002.4(B) General Rules related to Discouragement
  • Section 1002.6(A) General Rule Concerning Use of Information
  • Section 1002.8(A) Standards for Special Purpose Credit Programs
  • Section 1002.8(B) Special Purpose Credit Program Controlling Provisions
  • Section 1002.8(C) Special Rule Concerning Requests and Use of Information

Banks should review these amendments and official interpretations and make any necessary changes to their compliance policies, procedures, and fair lending plans before the compliance deadline. We expect that these changes will reduce the regulatory burden and litigation risk exposure that banks have historically faced with respect to disparate impact claims. However, we caution banks that a future administration could take a different stance on disparate impact and perform a lookback during an exam or enforcement despite the changes to the regulation. Winthrop’s regulatory attorneys can help you discuss compliance strategies and recommend any changes.

April 29, 2026