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CFPB Examination and Enforcement Update

CFPB Examination and Enforcement Update. Christopher J. Willis Consumer Financial Services Group Ballard Spahr LLP 678-420-9436 willisc@ballardspahr.com. Outline. The CFPB’s recent examination and enforcement activity The Bureau’s “Responsible Conduct” Bulletin and what it means

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CFPB Examination and Enforcement Update

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  1. CFPB Examination and Enforcement Update • Christopher J. Willis • Consumer Financial Services Group • Ballard Spahr LLP • 678-420-9436 • willisc@ballardspahr.com

  2. Outline • The CFPB’s recent examination and enforcement activity • The Bureau’s “Responsible Conduct” Bulletin and what it means • Hot topics: • Collections • Fair lending and new “baseline” procedures • Student lending-specific issues

  3. Recent Exam and Enforcement Activity • Bank examinations continue, as in 2012 • Targeted examinations in particular operational areas • Non-bank examinations, especially in debt collection • Recent enforcement actions and consent orders: • Auto finance • Loan originator compensation • Captive reinsurance of PMI • Debt settlement and foreclosure rescue scams • Ongoing investigations related to student loans

  4. “Responsible Conduct” • The CFPB released a Bulletin on June 25, 2013, describing “responsible conduct” that it would consider in terms of giving entities “extra credit” with respect to enforcement investigations and outcomes • Four “pillars”: self-policing, self-reporting, remediation and cooperation • The difficult issue of self-reporting • Practical difficulties in “cooperation” • No formula or certainty in terms of how factors will be weighed

  5. Hot Topics: Collections • The CFPB has made collections-related issues a very high priority • Two recent Bulletins on unfair and deceptive practices relating to collections • We see a great deal of focus on collections issues in examinations and enforcement investigations: • Call timing, frequency and content • Incentive compensation • Convenience fees • Do-not-calls and cease & desists • Reference calls

  6. Hot Topics: Fair Lending • The Bureau’s reports on student lending highlight school-specific variables as areas of fair lending concern in student lending • Recent release of “Baseline ECOA Review Procedures” • Heavy emphasis on fair lending compliance management systems – self-assessment of existing operations and assessment of any business changes (new products, etc.). • Disparate impact and discretion continue to be focus areas • No specific guidance with respect to student lending

  7. Hot Topics: Student Lending-Specific • Availability of deferment/forbearance options on private student loans that mirror those applicable for Title IV loans • Credit reporting (and responding to credit reporting disputes) • Underwriting standards • Electronic Funds Transfers (recurring EFT payments)

  8. Preparing for CFPB Scrutiny • Document compliance policies and procedures • Pay attention to complaints and other UDAAP “leading indicators” • Conduct compliance assessments from a consumer fairness perspective • Pay special attention to fair lending, credit reporting, collections and payments issues • Assess whether key records are easily retrievable in response to potential regulatory requests • Examine vendor oversight issues (especially with respect to collections)

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