The bureau is discontinuing supervisory recommendations and ending flexible options it put in place for consumer reporting agencies and data furnishers in response to the COVID-19 pandemic.
The Consumer Financial Protection Bureau has rescinded additional policy statements with implications for Fair Credit Reporting Act compliance and resulting in changes to communications about supervisory actions.
The CFPB announced it is rescinding seven policy statements issued in 2020 that provided temporary flexibilities to financial institutions in consumer financial markets including mortgages, credit reporting, credit cards and prepaid cards. The seven rescissions, effective April 1, provide guidance to financial institutions on complying with their legal and regulatory obligations, according to a news release.
With the rescissions, the CFPB said it intends to exercise the full scope of the supervisory and enforcement authority provided under the Dodd-Frank Act. The CFPB is also rescinding its 2018 bulletin on supervisory communications and replacing it with a revised bulletin describing its use of matters requiring attention (MRAs) to effectively convey supervisory expectations.
Effective immediately, the bureau reports in the revised bulletin that it will no longer issue formal written supervisory recommendations. The bureau believes that MRAs will more effectively convey its supervisory expectations.
Bureau examiners will also continue to provide informal feedback and suggestions to supervised entities as part of the supervisory process. While MRAs are not legally enforceable, the bureau expects supervised entities to correct the matters identified in MRAs promptly and effectively. The bureau will consider a supervised entity’s response to MRAs when assessing its compliance rating or otherwise evaluating the risks that its activities pose to consumers and markets. These risk considerations may be used by the bureau for prioritizing future supervisory work and assessing the need for potential enforcement actions. The bureau reported it is committed to using the full range of its authorities to promote compliance with the law and to ensure that supervised entities protect consumers.
Statement on Supervisory and Enforcement Practices Regarding the Fair Credit Reporting Act and Regulation V
The bureau also rescinds, as of April 1, the portion of the statement that sets forth its flexible supervisory and enforcement approach during the COVID-19 pandemic regarding compliance with the FCRA and Regulation V, and announces its intent to exercise its supervisory and enforcement authority consistent with the Dodd-Frank Act and FCRA and with the full authority afforded by Congress consistent with the statutory purpose and objectives of the bureau.
The rescission leaves intact the section titled “Furnishing Consumer Information Impacted by COVID-19,” which articulates the CFPB’s support for furnishers’ voluntary efforts to provide payment relief and that the CFPB does not intend to cite in examinations or take enforcement actions against those who furnish information to consumer reporting agencies that accurately reflect the payment relief measures they are employing.
The CFPB also recently rescinded its policy statement on Unfair, Deceptive, or Abusive Acts or Practices (UDAAP), ACA International previously reported.
All the rescinded policy statements and MRA Bulletin include
The rescission also withdraws the CFPB as a signatory to the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (April 7, 2020) and the Interagency Statement on Appraisals and Evaluations for Real Estate Related Financial Transactions Affected by the Coronavirus (April 14, 2020).
The rescission also instructs all financial institutions required to file quarterly to do so beginning with their 2021 first quarter data, due on or before May 31, 2021, for all covered loans and applications with a final action taken date between Jan. 1 and March 31, 2021.
The rescission also provides guidance as to how entities should now meet the specified information collections requirements relating to credit card and prepaid accounts.
The rescission leaves intact the section entitled “Furnishing Consumer Information Impacted by COVID-19” which articulates the CFPB’s support for furnishers’ voluntary efforts to provide payment relief and that the CFPB does not intend to cite in examinations or take enforcement actions against those who furnish information to consumer reporting agencies that accurately reflect the payment relief measures they are employing.
The rescission instructs land developers subject to ILSA and Regulation J to resume filing of annual reports of activity and financial statements as specified in Regulation J.
The rescinded bulletin is replaced by Bulletin 2021-01 announcing changes to how CFPB examiners articulate supervisory expectations. The new bulletin states that the CFPB will continue to rely on MRAs, explains the circumstances under which it will do so, and announces that the CFPB will discontinue use of Supervisory Recommendations.
ACA encourages members to read the bureau’s policy statement update and to look for additional information from ACA about how this should be considered.