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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
CFPB Examination and Enforcement Update
  • Christopher J. Willis
  • Consumer Financial Services Group
  • Ballard Spahr LLP
  • 678-420-9436
  • willisc@ballardspahr.com
outline
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
recent exam and enforcement activity
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
responsible conduct
“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
hot topics collections
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
hot topics fair lending
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
hot topics student lending specific
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)
preparing for cfpb scrutiny
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)