On April 1, 2021, the Bureau of Consumer Financial Protection rescinded seven policy statements released between March 26 and June 3, 2020, which provided for temporary relief from certain regulatory obligations during the COVID-19 pandemic. The CFPB also revoked its 2018 bulletin on supervisory communications and replaced it with a revised bulletin describing its use of Matters of Special Attention (ARM) to effectively convey supervisory expectations.
Dave Uejio, CFPB Acting Director, explained: “Providing regulatory flexibility to businesses should not come at the expense of consumers. As many financial institutions have developed more robust remote capabilities and demonstrated improved operations, it is no longer prudent to maintain these flexibilities. “This cancellation is another signal from the CFPB that it intends to take a more aggressive stance.
The Rescinded Policy Statements and the MRA Bulletin are:
This statement (as explained in our advance warning), provided that the CFPB takes into account the challenges facing financial institutions with respect to surveillance activities and enforcement actions during the pandemic. The CFPB had said it would be “sensitive to good faith efforts which were clearly aimed at helping consumers”.
This statement (as explained in our prior warning) relaxed the quarterly reporting requirements for reporting Home Mortgage Disclosure Act data under Regulation C. The cancellation instructs all financial institutions required to file quarterly to do so from their data from the first quarter 2021, due no later than May 31, 2021, for all covered loans and requests with a final decision made between January 1 and March 31, 2021.
This statement (as explained in our prior warning) suspended the requirements of Regulations E and Z to submit prepaid card and credit card account agreements. The cancellation reinstates these requirements and provides guidance on how financial institutions should now meet specified information collection requirements for credit cards and prepaid accounts.
This statement (as explained in our advance warning) highlighted supplier responsibilities under the Coronavirus Help, Relief and Economic Security Act (CARES Act) and informed vendors and consumer reporting agencies of the flexible approach of CFPB monitoring and enforcement during the pandemic with respect to compliance with the Fair Credit Reporting Act and Regulation V. Termination retains intact the section titled “Providing Information to Consumers Affected by COVID-19” which expresses support from CFPB to voluntary efforts by providers to provide payment relief, and which CFPB does not intend to cite in reviews or take enforcement action against providers for consumer reporting agencies that reflect faithfully the payment relief measures they employ.
The cancellation instructs land developers subject to ILSA and Regulation J to resume filing the annual activity reports and required financial statements.
This statement (as explained in our prior warning) provided that the CFPB would assess a creditor’s situation due to the pandemic before deciding to bring an action against a creditor who takes longer than required by Rule Z to resolve a billing error, provided that the creditor has made good faith efforts to obtain the necessary information and make a decision as quickly as possible.
This statement (as explained in our prior warning) provided that, in specified circumstances, the CFPB has not brought any action against a credit card issuer who has not obtained the E-SIGN Act consent of a consumer during a telephone call to enable the electronic delivery of certain written disclosures required by Regulation Z, both because the issuer has obtained both verbal consent from the consumer to the electronic delivery and verbal confirmation of its ability to review the electronic written disclosures.
In Bulletin 2018-01, published in 2018, the CFPB announced changes in the way it articulates supervisory expectations at institutions. The CFPB then said it would continue to communicate its written findings to institutions through review reports and letters of supervision. These reports and letters were to include two categories of findings that reflect the expectations of the supervisory authorities: (I) matters requiring special attention (ARM), and (ii) prudential recommendations (RS). The Bureau replaced the 2018 bulletin with the new 2021-01 bulletin. This bulletin announced changes in the way CFPB examiners articulate supervisory expectations. The new bulletin indicates that the CFPB will continue to rely on MRAs. The Bureau explained that its reviewers will use MRAs to communicate to an entity’s board of directors and senior management the objectives that the entity should achieve to address violations identified by the CFPB. The bulletin reiterated that it expects entities to implement a compliance management system that “among other things, effectively prevents, identifies and addresses risks to consumers”. The bullet also indicated that the CFPB will stop using SRs as it believes MRAs will more effectively communicate CFPB’s oversight expectations.
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Banks, managers and other financial institutions should be aware that the CFPB has canceled these temporary flexibilities and should update their compliance policies accordingly.
We will continue to monitor new guidance from federal regulators regarding the pandemic and its effects.