ACA International submitted comments advocating for clarity in the rule that will streamline regulations between federal agencies and avoid regulation through enforcement actions.
1/19/2021 13:30
A rule developed by the Consumer Financial Protection Bureau in partnership with other federal financial regulatory agencies was finalized Tuesday to clarify differences between regulations and supervisory guidance and the use of the guidance for supervised entities.
The rule codifies the statement on supervisory guidance, with amendments, that the bureau and other federal financial regulatory agencies issued in September 2018, according to a news release from the CFPB.
ACA International submitted comments to the CFPB Dec. 28, noting the importance of clarity between regulations and supervisory guidance and the legal parameters and requirements surrounding their use.
“Clear rules are pertinent for ACA members and consumers, and ACA supports the bureau’s clarification that supervisory criticisms should continue to be specific as to practices, operations, financial conditions, or other matters that could have a negative effect on the safety and soundness of the financial institution, could cause consumer harm, or could cause violations of laws, regulations, final agency orders, or other legally enforceable conditions,” ACA Vice President and Senior Counsel of Federal Advocacy Leah Dempsey said in the comments. “While ACA supports the ability to provide compliance clarifications through supervisory guidance, it should not be used as a tool to create new requirements or create a path for rulemaking through enforcement actions.”
In addition to the CFPB, the Federal Deposit Insurance Corporation, Board of the Governors of the Federal Reserve System, Office of the Comptroller of the Currency and the National Credit Union Administration sought comments on the proposed rule in December to “confirm that the agencies will continue to follow and respect the limits of administrative law in carrying out their supervisory responsibilities,” ACA previously reported.
There is a need for clear distinctions, in line with the Administrative Procedures Act, about the differences between regulations and supervisory guidance, Dempsey added, and all rulemaking should follow compliance with the Small Business Regulatory Enforcement Fairness Act.
ACA also supports supplementary actions like the issuance of frequently asked questions to help explain regulatory expectations and the use of formal advisory opinions.
“ACA fully understands and agrees that advisory opinions cannot rewrite rules. However, these opinions should be used to address difficulties in understanding compliance expectations,” Dempsey said.
The CFPB also reports that “unlike a law or regulation, supervisory guidance does not have the force and effect of law and the bureau does not take enforcement actions or issue supervisory criticisms based on non-compliance with supervisory guidance,” according to the news release. “Rather, supervisory guidance outlines supervisory expectations and priorities, or articulates views regarding appropriate practices for a given subject area.”
The rule will take effect 30 days after publication in the Federal Register.