The report reflects the bureau’s approach to assessments of supervised entities and regulatory relief, including for debt collectors, because of the impact of the COVID-19 pandemic.
The Consumer Financial Protection Bureau has released a special edition of its Supervisory Highlights report detailing prioritized assessments for mortgage servicing, auto and student loan servicing, credit card account management, consumer reporting-furnishing, debt collection, deposits, prepaid cards and small business lending.
“The COVID-19 pandemic had immediate and broad implications for bureau-supervised entities. In a very short period of time, entities needed to adapt to a number of operational challenges, which included state stay-at-home orders, staffing shortages, transition to partial or total remote work, and business closures,” the report states.
According to the report, in May 2020 the CFPB rescheduled about half of its planned examination work and conducted prioritized assessments of supervised entities in response to the pandemic. The assessments focused on higher-level inquiries designed to obtain real-time information from a broad group of supervised entities. It prioritized areas where it could determine issues posing the most risk to consumers and where Congress provided special provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help consumers.
The report reflects information gathered from supervised entities from May through September 2020, including how the institution was assisting consumers, challenges the institution was facing as a result of the COVID-19 pandemic and changes the institution made to its compliance management system (CMS) in response to the pandemic.
Of note, the assessments are not designed to identify violations of federal consumer financial law, but rather to find and assess risks and communicate these risks to supervised entities so that they can be addressed to prevent consumer harm.
In the report, the bureau also reviews the impact of COVID-19 on consumers and how it provided guidance and regulatory relief for supervised entities as they focused on assisting consumers.
Last year, ACA International members received a steady flow of inbound calls from consumers seeking help managing their finances and exploring hardship programs as a result of the ongoing COVID-19 pandemic.
“The bureau recognized the challenges posed by the pandemic and encouraged supervised entities to focus on assisting consumers. The bureau issued a number of statements that provided entities with temporary regulatory relief,” the report states. “The bureau also announced that, in certain instances, the bureau would take a flexible supervisory and enforcement approach during the pandemic.”
Highlights from the report include:
- Many entities offered accommodations to consumers that experienced pandemic-related hardships. Even where not legally required, many entities also offered accommodations to consumers, including expanded payment assistance programs and fee waivers.
- Many institutions created COVID-19 response teams to identify and address consumer and industry challenges caused by the pandemic.
- For debt collection, some participants in the industry reported an increase in consumer contacts and payments, which several attributed to more consumers being at home, reduced spending and the resources provided by pandemic assistance programs.
- In general, collectors responding to the prioritized assessments indicated that they transitioned partially or entirely to remote work during the review period. Other workplace changes were reported, including the implementation of remote call monitoring tools and modifications to telework policies.
- The bureau also summarized the impact of wage garnishment suspension and payment processing delays on collection agencies and consumers they work with. Overall, the bureau noted collectors were able to remedy payment processing delays by retroactively posting payments. Certain collectors experienced delays in processing payments that were sent by mail and received at a physical location that was temporarily inaccessible due to the pandemic. In those instances, examiners generally observed the entity retroactively posting payments effective on the date payment was delivered.
While this report is a special edition, the bureau states it will continue to publish supervisory highlights to aid bureau-supervised entities in their efforts to comply with federal consumer financial law.
Entities involved in the prioritized assessments received letters detailing any observed risks and supervisory recommendations, if applicable.
Read the complete report here.