Recent SCRA Regulatory and Enforcement Trends

Over the past year, the Department of Justice and federal regulators have made several major changes in their approach to the Servicemembers Civil Relief Act (SCRA). From encouraging financial institutions to provide SCRA’s benefits to borrowers who do not meet the statutory requirements, to identifying potentially Unfair or Deceptive Acts or Practices (UDAP) arising from SCRA-related issues, the government has expanded the scope of potential issues that may affect your servicemember customers. Given that no agency has any rulemaking authority under the SCRA, however, the government has instead taken a “guidance via consent order” approach that leaves financial institutions unsure of what is expected under the SCRA. With large financial penalties and significant reputational risk for non-compliance, financial institutions should stay apprised of the regulators’ interpretation of the SCRA.

We discussed how regulators are expanding their view of SCRA compliance. We will cover recent key consent orders, guidance and public statements from various government entities, and recent enforcement trends.