By Nicole D. Prysby, J.D.
Several groups have submitted comments on the Consumer Financial Protection Bureau’s Request for Information seeking input on the CFPB’s enforcement process. As requested by the CFPB (see Banking and Finance Law Daily, Feb. 7, 2018), the comments focus on specific actions that could be taken to improve the enforcement process, including the use of alternatives to enforcement.
ABA. The American Bankers Association sent comments focusing on enforcement alternatives and other enforcement issues. The ABA suggested that the CFPB use supervision and regulation as alternatives to enforcement. According to the trade association, supervision would be more efficient, lead to quicker resolution, and reduce the harm to consumer confidence caused by enforcement action. Additionally, regulation would provide more consistent and specific guidance.
The ABA recommended that the CFPB’s Action Review Committee refer matters to supervision, assign supervisory staff to facilitate the transfer of enforcement matters to supervision, and use the Supervisory Highlights publication to explain why certain matters are resolved via supervision versus enforcement. For regulatory modifications, the CFPB should reduce its reliance on the prohibition on unfair, deceptive, and abusive acts and practices to bring enforcement actions to prevent regulation by enforcement, and better define how the defendant would be on notice that the conduct was prohibited. The ABA also recommended:
- more communication between the CFPB and investigation subjects;
- provision of more details, openness, and time to respond to the Notice and Opportunity to Respond (NORA) process, and permit subjects of enforcement action the right to make an in-person presentation;
- more transparency about calculations under the civil money penalty (CMP) matrix;
- tailoring of boilerplate settlement provisions;
- coordination with other agencies; and
- less sensationalized press releases regarding settlements.
Joint letter. The Financial Services Roundtable, Consumer Bankers Association, and Consumer Mortgage Coalition also submitted comments, focusing on communication during investigations, the NORA process, standard provision in consent orders, and coordination with other agencies. The associations specifically recommended that the CFPB:
- communicate more frequently and meaningfully with investigation subjects;
- require quicker resolution of investigations;
- provide more details in the NORA letter and a greater time period and page limitation for the response;
- allow institutions under investigation the right to make an in-person presentation to the CFPB before the issuance of a NORA;
- implement a more formal CMP matrix;
- discontinue the use of boilerplate language in consent orders;
- coordinate enforcement activity with other agencies; and
- modify the Responsible Conduct Bulletin to clarify the benefits of self-reporting.
CCMC. The U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness (CCMC) proposed focusing on avoiding regulation by enforcement, establishing a more robust no-action letter process, limitations in enforcement, and avoiding regulatory duplication. Specifically, the CCMC recommended that the CFPB engage in more formal rulemaking processes and treat rulemaking as the only vehicle to establish new policy; provide clarity on the law through the no-action letter and advisory opinion process; and limit enforcement actions by limiting the CFPB’s authority, providing better notice of what the law requires, and seeking more appropriate penalties. The CCMC also recommended that civil money penalties be reserved for knowing violations, that self-reporting and remediation should receive greater credit, basing press releases about consent orders on the language in the consent order, and working with other federal agencies and state agencies to avoid duplication in enforcement.
Companies: American Bankers Association; Consumer Bankers Association; Consumer Mortgage Coalition; Financial Services Roundtable; U.S. Chamber of Commerce
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