CFPB Issues Final ‘No Action Letter’ Policy Without Substantial Change

CFPBThe federal Consumer Financial Protection Bureau (CFPB) recently issued its final policy regarding “no action letters.”

A copy of the final policy is available at: Link to Policy.

The final policy establishes a process to apply for non-binding statements from the CFPB as to whether it has any “present intention to recommend initiation of an enforcement or supervisory action against the requester with respect to a specified matter” involving “innovative financial products or services that promise substantial consumer benefit where there is substantial uncertainty whether or how specific provisions of statutes implemented or regulations issued by the [CFPB] would be applied.”

As you may recall, the CFPB proposed the policy in October 2014.  The CFPB declined to make changes to its proposed policy in light of many of the comments received.

For example, the CFPB:

  • Declined to allow NALs when the matter does not involve an emerging product or service, or does not involve substantial regulatory uncertainty
  • Declined to adopt a specific timetable for approval or denial of a “no action letter” (NAL) after an application has been submitted
  • Declined to specifically include statements as to no-action treatment of unfair, deceptive, or abusive acts or practices (UDAAP) matters
  • Declined to make its no-action process binding on other regulators
  • Declined to change its application requirements to “identify the particular provisions of statutes or regulations about which NAL treatment is being requested, state why NAL treatment is necessary and appropriate to remove substantial regulatory uncertainty, and provide a candid explanation of potential consumer risks.”
  • Declined to require its staff to provide specific reasons for declining to provide NALs
  • Declined to provide NALs to third parties that may be associated with an applicant’s product or service (including trade groups), or to third party applicants as to their dealings with another company’s product or service

The CFPB noted that “[d]enials of a request for a NAL generally would not be published,” but “because a circumstance may arise in which publication of a denial would be in the public interest, the [final policy] does not categorically rule out publication of denials.”

The CFPB also noted that “a NAL is subject to subsequent revocation or modification in the discretion of Bureau staff, and may be immediate upon notice.”

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Ralph Wutscher's practice focuses primarily on representing consumer and commercial financial services companies, including depository and non-depository mortgage lenders and servicers, as well as mortgage loan investors, financial asset buyers and sellers, loss mitigation companies, third-party debt collectors, and other financial services providers. He represents the lending and financial services industry as a litigator, and as regulatory compliance counsel. For more information, please see: http://mauricewutscher.com/attorneys/ralph-t-wutscher/.