IBA Compliance Connection

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Do the new Predatory Loan Prevention Act (PLPA) rules apply to banks and credit unions? We heard that they contain a carve out for both banks and credit unions, but we cannot find it.

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No, the PLPA rules do not apply to banks and credit unions. The PLPA expressly exempts federally- and state-chartered banks, savings banks, savings and loan associations, and credit unions (although it could apply, for example, to financial institution’s nonbank subsidiary).

The new PLPA rules incorporating the APR calculation method required by the PLPA do not reference the Act’s exemption for banks and credit unions. However, as the statutory authority for the rules is the PLPA, we do not believe the PLPA rules would apply to these entities.

For resources related to our guidance, please see:

  • Predatory Loan Prevention Act, 815 ILCS 123/15-1-15(c) (“Banks, savings banks, savings and loan associations, credit unions, and insurance companies organized, chartered, or holding a certificate of authority to do business under the laws of this State or any other state or under the laws of the United States are exempt from the provisions of this Act.”)