February 12, 2018

CFPB Requests Feedback on Enforcement Processes


On February 12, the Consumer Financial Protection Bureau (Bureau) continued its review of Bureau functions by publishing a Notice and Request for Information on its enforcement processes (Enforcement RFI).1 In January, the Bureau announced it would begin examining its policies and practices by publishing RFIs seeking comment on enforcement, supervision, rulemaking, market monitoring, and education activities.2 The Enforcement RFI is the third in the series of reviews. Comment periods remain open for RFIs relating to the Bureau's use of civil investigative demands and adjudication proceedings. The next RFI will request feedback on supervisory processes.

The Enforcement RFI provides the industry with an opportunity to reform the Bureau's enforcement practices. Many industry participants, and especially banks subject to supervision and enforcement by both the Bureau and their prudential regulator, may consider requesting that the Bureau more closely align its processes with those used by the federal banking agencies. For example, industry participants may consider requesting that the Bureau develop a matrix for determining civil money penalties (CMPs) similar to the matrices long used by the federal banking agencies. Several recent court cases have shown, including PHH v. CFPB, that courts have criticized and refused to uphold the Bureau's penalty demands, and a formalized CMP matrix could bring needed clarity to the enforcement process. As other examples, industry participants may advocate for a formalized process for terminating enforcement actions, such as a process to petition the agency for termination upon satisfactory compliance with the substantive provisions of enforcement orders, or advocating for an amendment to the Bureau's Notice and Opportunity to Respond and Advise (NORA) policy to provide enforcement targets with notice and an opportunity to respond as a matter of right, rather than the existing approach, which is discretionary.

The Bureau advised that it is requesting feedback on all aspects of its enforcement processes, and identified seven specific issues for comment, which are reproduced below.

  1. Communication between the Bureau and the subjects of investigations, including the timing and frequency of those communications, and information provided by the Bureau on the status of its investigation;
  2. The length of Bureau investigations;
  3. The Bureau's Notice and Opportunity to Respond and Advise process, including:
    • CFPB Bulletin 2011–04, Notice and Opportunity to Respond and Advise (NORA), issued November 7, 2011 (updated January 18, 2012), including whether invocation of the NORA process should be mandatory rather than discretionary; and
    • The information contained in the letters that the Bureau may send to subjects of potential enforcement actions pursuant to the NORA process, as exemplified by the sample letter;
  4. Whether the Bureau should afford subjects of potential enforcement actions the right to make an in-person presentation to Bureau personnel prior to the Bureau determining whether it should initiate legal proceedings;
  5. The calculation of civil money penalties, consistent with the penalty amounts and mitigating factors set out in 12 U.S.C. 5565(c), including whether the Bureau should adopt a civil money penalty matrix, and, if it does adopt such a matrix, what that matrix should include;
  6. The standard provisions in Bureau consent orders, including conduct, compliance, monetary relief, and administrative provisions; and
  7. The manner and extent to which the Bureau can and should coordinate its enforcement activity with other Federal and/or State agencies that may have overlapping jurisdiction.

Comments must be received by April 13, 2018. Provided here is a link to the RFI published in the Federal Register. If you would like assistance in submitting comments on the RFI, please contact one of the attorneys listed herein.

© Arnold & Porter Kaye Scholer LLP 2018 All Rights Reserved. NOTICE: ADVERTISING MATERIAL. Results depend upon a variety of factors unique to each matter. Prior results do not guarantee or predict a similar results in any future matter undertaken by the lawyer.

  1. 83 Fed. Reg. 5999 (Feb. 12, 2018).

  2. Acting Director Mulvaney Announces Call for Evidence Regarding Consumer Financial Protection Bureau Functions, Bureau Press Release (Jan. 17, 2018).

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