CFPB Report December 5, 2014

December 5, 2014

CFPB Ombudsman Releases 2014 Annual Report

On Monday, November 24, 2014, the CFPB Ombudsman released its third annual report detailing "inreach" within the Bureau, and summarizing the interactions with parties outside the CFPB in its information collection. The report covers various topics including ways the Bureau can improve access for the visually impaired, to facilitating resolutions and identifying options for industry. The Ombudsman's office is an independent, impartial, and confidential resource for consumers and companies to informally resolve issues with the CFPB.

 

Key components from the report about how the Bureau interacts with the industry include:

 

Consumer Response Portal and the Complaint process | The report includes the following reference of concerns brought to the Ombudsman's attention: "Inability of advocates to submit complaints on behalf of multiple consumers at one time." Other points regarding the Consumer Response process include:

  • In FY2014, the CFPB Division of Consumer Response began a broader review of the consumer experience with the agency. For example, the department is in the midst of a project to evaluate consumers' experience with the consumer complaint process and develop improvements based on consumer feedback. As part of these efforts, the department conducted a pilot survey of consumer experience with the consumer complaint process, and plans to conduct a broader survey in the future.
  • The Ombudsman understands Consumer Response is working on improvements to streamline the complaint form, as well as the intake process, for new consumer complaints.
  • There also is a cross-divisional effort to study how consumers engage with the agency to determine how they can most benefit from the resources offered by the agency.

Enforcement matters |  In a footnote, the report says: "In FY2015, the Ombudsman will conduct an independent review of consent orders and their corresponding CFPB press releases." This is presumably to address the concern that the Consent Orders are not in keeping with the tone or content of the press releases.

 

Regulatory Interpretations | The report expressed concern regarding "Companies or their representatives that wanted a regulatory interpretation, but did not know where to obtain that information." This is in keeping with a general need for clearer interpretations of regulations.

 

Supervision | The Ombudsman report states: "This year, the Ombudsman learned that the CFPB developed internal guidance about consumer interviews that may be conducted as part of an examination of a financial entity. In anticipating possible external stakeholder concerns and to serve as an independent advisor and early warning system for the CFPB, the Ombudsman shared feedback and suggestions with the Offices of Supervision, Examinations and Supervision Policy for their consideration. The Ombudsman understands the CFPB plans to implement some of the suggestions we shared."

 

CFPB Publishes Fall Rulemaking Agenda

The CFPB has published its Fall 2014 Rulemaking Agenda, which was submitted to the Office of Management and Budget as part of the Unified Agenda of Regulatory and Deregulatory Actions. The CFPB, an independent agency, voluntarily submits the semi-annual agenda, which provides a snapshot of its future regulatory timetable. While the dates provided are tentative, the agenda offers a general timeframe for rulemaking.

 

Compared to previous agendas, the new release showed delays in some regulatory actions. The pre-rule activity on payday lending and deposit advance products, expected to begin before the end of 2014, is now scheduled to begin in February 2015. Overdraft protection rules which were anticipated to begin pre-rulemaking after payday lending actions have been pushed to July 2015. Debt collection pre-rule activity is now scheduled for April 2015. The final HMDA regulation is now slated for July 2015.

 

CFPB Announces Field Hearing on Medical Debt

On Monday, December 1, 2014, the CFPB announced it will hold a field hearing on Thursday, December 11, 2014 in Oklahoma City to discuss medical debt collection.  CFPB Director Richard Cordray is scheduled to offer remarks, in addition to testimony from consumer groups, industry representatives, and members of the public. The hearing is open to the public, but RSVP is required. The CFPB will offer online viewing via livestream on its blog the day of the event.

 

CFPB Reaches Settlement with Debt Settlement Firm

On Thursday, December 04, 2014, the CFPB announced it had reached a settlement with Premier Consulting Group, LLC and the Law Office of Michael Lupolover for allegedly charging consumers illegal upfront fees for debt-settlement services they never received, a violation of the Telemarketing Sales Rule (TSR). According to the proposed consent order, the defendants marketed and sold debt-relief services to consumers since September 2010. If the U.S. District Court for the Southern District of New York agrees to issue a consent order, the defendants would pay a civil penalty of $69,075 and would be enjoined from any further violations of the TSR.



Treasury Releases Financial Research Annual Report

On Tuesday, December 2, 2014, The U.S. Department of Treasury's Office of Financial Research (OFR)published its third annual report to Congress, which found threats to financial stability have risen in the past year. Specifically, the OFR raised concerns about:

  • Excessive risk-taking during an extended period of low interest rates and low volatility;
  • An increase in market fragility resulting in declining market liquidity and persistent risks of asset fire sales and runs, and;
  • The migration of financial activity away from banks toward less regulated parts of the financial system where threats could be significant, but are more difficult to assess.

FDIC Assesses Strength of the Banking Industry

On Tuesday, November 25, 2014 the FDIC released its  Quarterly Banking Profile (QBP) for the third quarter of 2014 showing the banking industry continued to improve, but still faces challenges. In the way of progress, earnings were higher, net operating revenue posted the first year over year increase in five years, net charge offs were at a seven year low, and asset quality continued to improve. Also, there were fewer unprofitable banks, "problem" banks, and bank failures. Challenges included a low interest rate environment putting pressure on margins and forcing institutions to extend asset maturities, which raised concerns about interest rate risk. Also, loan loss provisions increased for the first time in five years. Read CBA's summary of the QBP here.



FTC, State AGs Settle with Credit Score Entities

On Thursday, November 19, 2014, the Federal Trade Commission (FTC) and Attorneys General from Ohio and Illinois reached a settlement with credit score agencies who agreed to pay $22 million to consumers for advertising "free" credit scores and subsequently charging $29.95 per month for credit monitoring services never agreed to by the consumer. More than 210,000 complaints were received about the scheme. The companies were charged with violations of the FTC Act and the Restore Online Shoppers' Confidence Act (ROSCA), as well as the Illinois Consumer Fraud Act and the Ohio Consumer Sales Practices Act.



Merchant Financial Cyber Partnership Sends Letter to Capitol Hill

On Thursday, December 4, 2014, the Merchant Financial Cyber Partnership, of which CBA is a member,sent a letter, signed by the Financial Services Roundtable and Retail Industry Leaders Association, to Congressional leadership urging Congress take up information sharing legislation. The letter advocated to increase the current level of voluntary cybersecurity information sharing, while recognizing and responding to key privacy concerns, by:

  • Modifying current constraints to allow for improved information sharing;
  • Enabling existing information sharing and analysis through flexible mechanisms to gain access to important cyber threat information;
  • Increasing threat information sharing between the public and private sectors and within and between private sectors by providing a safe harbor from liability concerning the accuracy of and use of shared information;
  • Increasing funding for government for research to develop and test next generation security controls;
  • Updating the criminal code to adequately include cybercrime; and
  • Enhancing law enforcement capabilities to investigate and prosecute criminals internationally.

House Passes Bill Changing SIFI Bankruptcy Code

On Monday, December 1, 2014, the U.S. House of Representatives passed a bill allowing a failing financial institution with over $50 billion in assets to more easily pursue bankruptcy proceedings rather than being dissolved through the FDIC's Orderly Liquidation Authority (OLA) set forth in Title II of the Dodd-Frank Act. The Orderly Liquidation Authority has been criticized for the inability to manage a large failing financial institution and for temporarily offering credit facilities to a failing financial institution, which could create moral hazard.

 

The bill "removes potential obstacles to an efficient bankruptcy of a financial institution," said its chief sponsors, Reps. Bob Goodlatte (R-VA), Spencer Bachus (R-AL), John Conyers (D-MI).

 

With bipartisan support early in the legislative process, the bill easily passed the House. A companion bill has not been introduced in the Senate.



House Passes Package of Financial Services Bills

On Tuesday, December 2, 2014, the House passed four financial services bills including a study of Regulation D, and efforts to reduce duplicative regulation of small business investment company advisers.

 

"Incomprehensible Washington regulations complicate the lives of consumers, make investors less willing to invest, and deny small businesses access to investments that create jobs. The House is once again taking bipartisan action to eliminate costly, outdated and unnecessary red tape and now the Senate needs to do the same," said House Financial Services Committee Chairman Jeb Hensarling (R-TX).

 

Sponsored by Rep. Robert Pittenger (R-NC), The Regulation D Study Act (HR 3240), directs the Government Accountability Office to offer to Congress recommendations about updating banking regulations to reflect modern technology, such as online banking and ATM's. Regulation D currently limits consumers to six remote transfers between their checking and savings accounts per billing period. The bill passed the House by a unanimous vote of 442-0.  The House also passed three additional bills by voice vote: 

  • Disclosure Modernization and Simplification Act (HR 4569) | Sponsored by Rep. Scott Garrett (R-NJ), the bill would allow public companies to submit a summary page of all material information included in annual Securities and Exchange Commission (SEC) filings and directs the SEC to simplify financial reporting requirements for small and emerging growth companies.
  • Small Business Investment Companies Advisers Relief Act (HR 4200) | Sponsored by Rep. Blaine Luetkemeyer (R-MO), the bill would amend the Investment Advisers Act of 1940 and would reduce duplicative regulation of advisers to small business investment companies.
  • HR 5471 | Sponsored by Rep. Gwen Moore (D-WI), the bill would clarify Dodd-Frank treatment of affiliates of non-financial firms using a central treasury unit as a risk-reducing best practice to centralize and net the hedging needs of affiliates.

Fed Board Announces Payment System Risk Policy Changes

On Monday, December 1, 2014, the Federal Reserve Board announced the adoption of changes to Part II of the Federal Reserve Policy on Payment System Risk (PSR policy) designed to enhance the efficiency of the payment system. The changes are largely related to the posting rules for automated clearing house and commercial check transactions.

 

The Board also adopted companion amendments to Regulation J to permit the Reserve Banks to obtain settlement from paying banks as early as 8:30 a.m. ET for checks that the Reserve Banks present. The amendments also permit the Reserve Banks to require paying banks receiving presentment of checks from the Reserve Banks to make the proceeds of settlement for those checks available to the Reserve Banks as soon as 30 minutes after receipt of the checks.