Bureau of Consumer Financial Protection RFI's

 

In January 2018, the Bureau of Consumer Financial Protection announced a call for evidence to ensure it is fulfilling its proper and appropriate functions. The request for information (RFI) process solicits public feedback on topics ranging from enforcement, supervisory, rulemaking, market monitoring and educational activities.  To date, the Bureau has issued RFIs on the following topics:

 

 

Civil Investigative Demands

Comments Submitted - April 26, 2018

The Associations and their members believe a well-functioning Bureau is critical to maintaining a thriving and stable consumer finance marketplace.  Our concerns lie not with the Bureau’s mission but with the methods the Bureau has used at times to pursue that mission.  We also commend the Bureau for its efforts to solicit industry feedback.

At times the Bureau has wielded its investigative powers without first considering alternative and more tailored approaches, and without sufficient regard for the impact on regulated entities, the long-term impact on consumer financial marketplace, or the opportunity costs of the use of enforcement resources.

Although the Bureaus rules are similar to those of other federal enforcement agencies, the practices are generally much more rigid, less efficient, and more burdensome than those of other agencies.  CID’s are often overbroad, issued after insufficient coordination with non-Bureau enforcement partners, and handled without regard to balancing burdens on the recipient the needs of the Bureau.

At times, the CIDs have also been emblematic of the jurisdictional overreaching that has resulted in “regulation by enforcement.”

The comment letter sets forth specific recommendations to address a number of these concerns. 

 

Administrative Adjudications

Comments Submitted - May 4, 2018

The Associations stressed the importance of expeditious resolution, and urged the Bureau to look to the Federal Rules of Civil Procedure (“FRCP”) and the Federal Rules of Evidence (“FRE”) as benchmarks for specific timelines, breadth of relevant discovery, and other procedural standards.  We believe that alignment between the Bureau’s rules on administrative adjudications with the FRCP and FRE would allow respondents to have more clarity regarding the manner in which these proceedings are organized, as most respondents have familiarity with these two standards, and also would provide respondents with more of an ability to appropriately respond to potential charges.

Specifically, the Associations also urged the Bureau to amend the Rules to provide respondents with more time to prepare a response to a notice of charges.  Provide respondents with sufficient time to adequately investigate and prepare a well-informed submission, amend the “affirmative disclosure” process for discovery, withdraw its policy of disfavoring the granting of requests for extensions to file responses, produce documents in electronic form to respondents in the first instance and at the Bureau’s expense, and amend the rules to provide respondents with more expansive discovery.

 

Enforcement Process

Comments Submitted - May 14, 2018

The Financial Services Roundtable, and the Consumer Mortgage Coalition submitted comments to the Bureau of Consumer Financial Protection’s request for information on the effectiveness and efficiency of the Bureau’s enforcement of federal consumer financial laws.

The Associations stressed the importance of the Bureau’s ability to provide vigilant oversight across the consumer financial landscape, especially where institutions might not otherwise be subject to federal oversight, and that the Bureau can use its enforcement powers to facilitate a thriving and stable consumer financial market.  The letter specifically addressed lack of enforcement coordination with other agencies, unclear use of responsible conduct, the past use of press releases to paint a picture of guilt, regulation by enforcement, and the length of investigations.

“CBA members support financial regulators’ duty to fully enforcement the rules and regulations on the book,” CBA General Counsel and Executive Vice President Steve Zeisel said. “With that comes the responsibility to ensure enforcement actions or done, when appropriate, in coordination with other agencies, are clearly defined, and conducted within an appropriate timeframe. It is also vital for the Bureau to stop the practice of using enforcement actions to circumvent the rule writing process and issuing press releases to create an illusion of guilt before a conclusion has been reached.”

 

Supervision Processes

Comments Submitted - May 21, 2018

The letter discusses the following areas of concern:

  • The Bureau should focus on genuine consumer harm and deterrence of bad actors;
  • Examinations should begin and end expediently to provide an interval of normal operation;
  • The Bureau must provide an appropriate amount of time to implement regulatory changes;
  • The Bureau should prioritize and conduct examinations for compliance with specific requirements based on potential for genuine consumer harm; and,
  • Supervisory actions should be done in coordination with other agencies to promote efficiency, harmonize data requests and resolve issues in concert.

 

External Engagements

Comments Submitted - May 29, 2018

The letter discusses the following areas:

  • Field Hearings and other Public Forums: The Bureau should conduct regular stakeholder meetings for policy considerations, rather than one field hearing per issue;
  • Supervisory Highlights: These should provide as much information about examination findings as possible while preserving confidentiality, but the findings should not effectively constitute new regulatory obligations;
  • Consumer Advisory Board Participation: The Bureau should seek input from its Advisory Boards on rules in the pipeline, rather than finalized rules;
  • Participation in Industry Events: The Bureau’s participation in industry events is an important part of the flow of information and should continue;
  • Midnight Embargo: The practice of embargoing important information makes it difficult for key stakeholders to present a viewpoint; and,
  • Facts Asserted in Consent Orders & Press Releases for Enforcement Actions: The Bureau should review the previous practice of overstating and embellishing facts in consent orders and press releases that unfairly damage an institution’s reputation and the overall market.

 

Consumer Complaint Reporting

Comments Submitted - June 4, 2018

The letter discusses three main issues of concern regarding the complaint reporting process:

  • The Database Creates Consumer Harm and Privacy Concerns: The Database does not protect consumers from re-identification risks and creates consumer harm. 
  • The Database Does Not Enhance Consumers’ Ability to Compare: The publication of raw complaint narratives subjects companies to inaccurate and unfair criticism that is often subjective and potentially misleading without institutional proprietary context or facts.  As such, this information may actually misinform consumers; doing the exact opposite of what the Bureau is mandated to accomplish.
  • The Dodd-Frank Act Does Not Require or Contemplate the Database be Public: The authors of Dodd-Frank did not intend for Bureau to publicly share complaints.  In fact, plain reading of the statute indicates that they did not specifically authorize it as they have in other contexts.

 

Rulemaking Processes

Comments Submitted - June 7, 2018

The letter includes 12 specific recommendations on ways to promote a standardized and transparent rulemaking process which incorporates public review and input. The letter specifically focused on improvements to the Bureau’s approach to information gathering, cost/benefit analysis, comment process, and final rule implementation and support.

The letter also suggests a model rulemaking framework, below, for consideration by the Bureau.

 

Adopted Regulations & New Rulemaking Authorities

Comments Submitted - June 19, 2018

CBA’s comment letter provides specific recommendations for adopted regulations to improve the customer experience and functioning of consumer financial markets, specifically:

 

Mortgage Related Rules

  • Ability to Repay Rule and Qualified Mortgage Standards
  • Mortgage Servicing
  • Loan Originator Compensation Rule
  • TILA-RESPA integrated Disclosure (TRID) Rule

 

Non-Mortgage Related Rules

  • Remittance Rule
  • Prepaid Accounts
  • Larger Market Participant Rules
  • No-Action Letter Policy
  • Data Aggregation Principles

 

Inherited Regulations & Inherited Rulemaking Authorities

Comments Submitted - June 25, 2018

The letter makes recommendations for the following issues reaching across multiple inherited regulations:

  • Updating and harmonizing regulations dealing with electronic or digital advertising and disclosures;
  • Amending and clarifying various requirements of the E-Sign Act and modernizing rules governing delivery of disclosures provided electronically; and,
  • Issues binding guidance on Unfair, Deceptive, or Abusive Acts or Practices.

 

The letter also discusses specific inherited regulations, including:

  • Regulation B: Equal Credit Opportunity Act;
  • Regulation C: Home Mortgage Disclosure Act;
  • Regulation E: Electronic Funds Transfer Act;
  • Regulation F: Fair Debt Collection Practices Act;
  • Regulation G: S.A.F.E. Mortgage Licensing Act;
  • Regulation P: Privacy of Consumer Financial Information;
  • Regulation V: Fair Credit Reporting Act;
  • Regulation X: Real Estate Procedures Act;
  • Regulation Z: Truth in Lending Act; and
  • Regulation DD: Truth in Savings Act.

 

Guidance & Implementation Support

Comments Submitted - July 2, 2018

CBA’s comments focused on ensuring the guidance process is transparent and does not inappropriately circumvent appropriate rulemaking.   To achieve this, the letter addressed ways to:

  • Improve the Bureau’s Regulatory Inquiries Function
  • Enhance Compliance Aids Usefulness
  • Formalize and Standardize Official Interpretations and Standalone Rules
  • Better Utilize Fair Lending Guidance and the Division of Supervision Enforcement
  • Improve Other Forms of Written Guidance
  • Modify the use of Disclaimers

 

Consumer Financial Education

Comments Submitted - July 9, 2018

CBA recommended the Bureau partner with community organizations, like churches and youth centers, as well as the U.S. Department of Education to ensure financial literacy resources help those most in need. By working with the Department of Education and local groups, CBA suggested the Bureau could build programs to boost financial literacy as early as preschool.

 

Consumer Complaint & Consumer Inquiry Handling Process Comments Submitted - July 16, 2018

 

In its letter, CBA discussed ways to make the process more efficient for the Bureau, consumers and financial institutions without exposing consumers to privacy concerns or misrepresenting the Bureau’s role in the complaint process.  To achieve these shared goals, CBA made the following recommendations:

 

  • Complaint / Inquiry Classification: The Bureau should have consumers classify their submissions as either complaints or inquiries. Currently, without this validation, simple inquiries are often classified as complaints during Bureau reporting.
  • Set a Clear Standard for Complaints: The Bureau should adopt a system similar to the Federal Trade Commission to differentiate between a true complaint against a financial institution as opposed to a statement of dissatisfaction not rooted in wrong-doing or a mistake (i.e.: dissatisfaction over a bank’s hours on Saturday should not be deemed a complaint for Bureau accounting).
  • Complaint Reclassification:  Financial institutions should be able to work with the Bureau to reclassify submissions as either inquiries or complaints if they are mislabeled when submitted to the Bureau.
  • Consumer Inquiry Process:  The Bureau should direct consumer inquiries to the financial institution and encourage the consumer to contact his or her financial institution for prompt resolution. CBA also stated a web chat function on the Bureau’s website could assist consumers and filter inquiries from complaints.