New CFPB Policies Address Innovation and Compliance; More to Come for the ARM Industry

Regulatory uncertainty for debt collectors using newer technologies, the subject of ACA International’s comments on the proposed policies, are part of future programs under review by the bureau.

9/11/2019 10:30 AM

CFPBNewsAdvocacy
New CFPB Policies Address Innovation and Compliance; More to Come for the ARM Industry

The Consumer Financial Protection Bureau is continuing its efforts to work on regulatory uncertainty for debt collectors and other financial services companies following the release of new policies on innovation and compliance.

The bureau announced three new policies Sept. 10 to promote innovation and facilitate compliance after collecting industry comments last year; and said it is going back to the drawing board for consideration of a proposal to help “innovators and other regulated entities confronting regulatory certainty.”

The three policies include: The No-Action Letter (NAL) Policy, Trial Disclosure Program (TDP) Policy, and Compliance Assistance Sandbox (CAS) Policy.

The policies address product sandboxes or “regulatory sandboxes” that essentially provide the opportunity for innovative products to be tested with consumers without regulatory burdens.

“The new NAL Policy improves on the bureau’s 2016 NAL Policy by having, among other things, a more streamlined review process focusing on the consumer benefits and risks of the product or service in question,” according to a CFPB news release.

In comments filed earlier this year, ACA International sought guidance on how the accounts receivable management industry can incorporate innovation into its financial services for consumers and recommended a safe harbor provision for a bona fide error defense under the Fair Debt Collection Practices Act in the sandbox policy.

“ACA International believes the industry will benefit from the No-Action Letter and Product Sandbox initiatives, however we will continue to seek additional clarity on debt collection specific issues,” said Leah Dempsey, ACA’s vice president and senior counsel, federal advocacy, in the comments.

Companies may test financial products or services where there is regulatory uncertainty under the CAS Policy, according to the CFPB, but it only provides a safe harbor from liability during the testing period under the Truth in Lending Act, the Electronic Fund Transfer Act, or the Equal Credit Opportunity Act. The current policy lacks relief under many relevant laws for the ARM industry.

The commentary in the CAS Policy notes, “A trade association commenter suggested that the bureau should use its authority to issue advisory opinions under the Fair Debt Collection Practices Act (FDCPA) to clarify regulatory expectations by providing clear legal interpretations for debt collectors that ant to use newer technologies…These kinds of comments on the importance of interpretive guidance build on earlier comments submitted in response to the bureau’s 2018 Request for Information on Guidance and Implementation upport (Guidance RFI). This feedback is informing the bureau’s present consideration of a proposal to implement an interpretive letter program that could benefit innovators and other regulated entities confronting regulatory uncertainty.”

The commentary also adds that, “The bureau agrees with these commenters that the present lack of an interpretive letter or advisory opinion policy represents a gap in the bureau’s plans for providing compliance assistance to stakeholders under the federal consumer financial laws. Because the bureau did not propose an interpretive letter or advisory opinion program in the Proposed Sandbox Policy, and because of the significant public interest in how such a program might be structured, the bureau believes it would be appropriate to provide an opportunity for public comment before establishing an interpretive letter or advisory opinion program. Accordingly, the bureau intends to separately propose an interpretive letter program as soon as practicable.”

ACA appreciates the bureau is continuing to evaluate solutions to regulatory uncertainty for the ARM industry and debt collectors. ACA members would be eager to participate in the product sandbox if given this relief in the event there was approval of a relevant application that met the CFPB’s criteria. If the CFPB cannot provide this relief, it would be unlikely that ACA members would consider a Product Sandbox application.

Meanwhile, the CFPB also announced this week it is working with multiple state regulators in the launch of the American Consumer Financial Innovation Network (ACFIN), to enhance coordination among federal and state regulators to facilitate financial innovation.

“Federal and state coordination promotes consistency in the regulation of consumer financial products and services while facilitating consumer-beneficial innovation,” said CFPB Director Kathy Kraninger in a news release. “ACFIN will provide a platform for federal and state regulators to coordinate with each other as they develop new rules of the road and apply existing ones.”

Related Content from ACA International:

CFPB Sets Comment Deadline on Proposed Changes to No-Action Letter Policy

ACA Asks for Inclusion of Debt Collection Companies in CFPB’s Proposed Innovation Policies


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

New CFPB Policies Address Innovation and Compliance; More to Come for the ARM Industry

The Consumer Financial Protection Bureau is continuing its efforts to work on regulatory uncertainty for debt collectors and other financial services companies following the release of new policies on innovation and compliance.

The bureau announced three new policies Sept. 10 to promote innovation and facilitate compliance after collecting industry comments last year; and said it is going back to the drawing board for consideration of a proposal to help “innovators and other regulated entities confronting regulatory certainty.”

The three policies include: The No-Action Letter (NAL) Policy, Trial Disclosure Program (TDP) Policy, and Compliance Assistance Sandbox (CAS) Policy.

The policies address product sandboxes or “regulatory sandboxes” that essentially provide the opportunity for innovative products to be tested with consumers without regulatory burdens.

“The new NAL Policy improves on the bureau’s 2016 NAL Policy by having, among other things, a more streamlined review process focusing on the consumer benefits and risks of the product or service in question,” according to a CFPB news release.

In comments filed earlier this year, ACA International sought guidance on how the accounts receivable management industry can incorporate innovation into its financial services for consumers and recommended a safe harbor provision for a bona fide error defense under the Fair Debt Collection Practices Act in the sandbox policy.

“ACA International believes the industry will benefit from the No-Action Letter and Product Sandbox initiatives, however we will continue to seek additional clarity on debt collection specific issues,” said Leah Dempsey, ACA’s vice president and senior counsel, federal advocacy, in the comments.

Companies may test financial products or services where there is regulatory uncertainty under the CAS Policy, according to the CFPB, but it only provides a safe harbor from liability during the testing period under the Truth in Lending Act, the Electronic Fund Transfer Act, or the Equal Credit Opportunity Act. The current policy lacks relief under many relevant laws for the ARM industry.

The commentary in the CAS Policy notes, “A trade association commenter suggested that the bureau should use its authority to issue advisory opinions under the Fair Debt Collection Practices Act (FDCPA) to clarify regulatory expectations by providing clear legal interpretations for debt collectors that ant to use newer technologies…These kinds of comments on the importance of interpretive guidance build on earlier comments submitted in response to the bureau’s 2018 Request for Information on Guidance and Implementation upport (Guidance RFI). This feedback is informing the bureau’s present consideration of a proposal to implement an interpretive letter program that could benefit innovators and other regulated entities confronting regulatory uncertainty.”

The commentary also adds that, “The bureau agrees with these commenters that the present lack of an interpretive letter or advisory opinion policy represents a gap in the bureau’s plans for providing compliance assistance to stakeholders under the federal consumer financial laws. Because the bureau did not propose an interpretive letter or advisory opinion program in the Proposed Sandbox Policy, and because of the significant public interest in how such a program might be structured, the bureau believes it would be appropriate to provide an opportunity for public comment before establishing an interpretive letter or advisory opinion program. Accordingly, the bureau intends to separately propose an interpretive letter program as soon as practicable.”

ACA appreciates the bureau is continuing to evaluate solutions to regulatory uncertainty for the ARM industry and debt collectors. ACA members would be eager to participate in the product sandbox if given this relief in the event there was approval of a relevant application that met the CFPB’s criteria. If the CFPB cannot provide this relief, it would be unlikely that ACA members would consider a Product Sandbox application.

Meanwhile, the CFPB also announced this week it is working with multiple state regulators in the launch of the American Consumer Financial Innovation Network (ACFIN), to enhance coordination among federal and state regulators to facilitate financial innovation.

“Federal and state coordination promotes consistency in the regulation of consumer financial products and services while facilitating consumer-beneficial innovation,” said CFPB Director Kathy Kraninger in a news release. “ACFIN will provide a platform for federal and state regulators to coordinate with each other as they develop new rules of the road and apply existing ones.”

Related Content from ACA International:

CFPB Sets Comment Deadline on Proposed Changes to No-Action Letter Policy

ACA Asks for Inclusion of Debt Collection Companies in CFPB’s Proposed Innovation Policies


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

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