On March 31, 2021, the Consumer Financial Protection Bureau (CFPB) rescinded seven recent policy statements and one bulletin in an effort to ensure compliance with consumer protection laws and reinforce its supervisory and enforcement authority. These rescissions are effective April 1, 2021.
The policy statements, which were issued between March 26 through June 3, 2020, were designed to provide flexibility to financial institutions that faced compliance challenges during the onset of the COVID-19 pandemic. Generally speaking, the now-rescinded guidance indicated that the CFPB, in exercising its supervisory and enforcement powers, would take into account these challenges as well as good-faith efforts by regulated entities to comply with existing regulations.
Acting Director David Uejio has been outspoken about changes in the CFPB’s approach and priorities since taking the helm following the resignation of former Director Kathleen Kraninger. The policy rescissions are consistent with this shift in messaging from the CFPB insofar as they signal a renewed emphasis on strict enforcement of consumer protection laws. When announcing the policy rescissions, Uejio stated that “many financial institutions have developed more robust remote capabilities and demonstrated improved operations,” and therefore, financial institutions no longer need these flexibilities “at the expense of consumers.”
Below is a list of the rescinded statements and bulletin:
- Supervisory and Enforcement – Under the COVID-19 response policy (March 26, 2020), the CFPB informed financial institutions that it would take into account operational impacts due to COVID-19 when exercising its enforcement authority. As part of its rescission, the Bureau withdrew its signature from two interagency statements: the statement regarding loan modifications (April 7, 2020), and the statement regarding real estate appraisals (April 14, 2020).
- HMDA – The HMDA quarterly reporting policy (March 26, 2020) stated that if an institution failed to report its HMDA quarterly data, the CFPB would not cite the failure in an examination or initiate an enforcement action.
- Information Collections – In a policy addressing information collections for credit card and prepaid account issuers (March 26, 2020), the CFPB stated that it would not cite in an examination or initiate an enforcement action against an institution for failing to submit certain required information.
- Fair Credit Reporting Act – Under the FCRA and Reg V policy (April 1, 2020), the CFPB stated that it would give flexibility to furnishers and consumer reporting agencies during the pandemic, taking into account circumstances institutions faced because of the pandemic and the institutions’ good-faith efforts to comply with their obligations as soon as possible. For more information, see our previous posts on COVID-19 credit reporting requirements and CFPB enforcement going forward.
- Interstate Land Sales Full Disclosure Act (ILSA) – The ILSA policy (April 27, 2020) provided that the CFPB would not take supervisory or enforcement action against land developers who delayed filing of required documents if the developers made good-faith efforts to file within a reasonable time.
- Regulation Z – The Reg Z Billing Error Resolution Timeframes policy (May 13, 2020) indicated that the CFPB would not cite a violation or bring an enforcement action against creditors who exceed the maximum timeframe allowed to resolve a billing error notice so long as the creditor made a good-faith effort to complete the investigation as quickly as possible.
- Electronic Credit Card Disclosures – Under the Electronic Credit Card Disclosures policy (June 3, 2020), the CFPB stated it would offer “temporary and targeted flexibility for credit card issuers regarding electronic provisions of certain disclosures required to be in writing.”
- Supervisory Communications – Finally, CFPB Bulletin 2021-01 rescinded Bulletin 2018-01, which outlined two forms of supervisory communication: matters requiring attention (MRAs) and supervisory recommendations (SRs). Going forward, the Bureau will discontinue use of SRs as a form of communication.
Notably, there is no mention of the CFPB rescinding its signature on the April 3, 2020, mortgage servicing rules interagency statement. The joint statement announced that the agencies would be flexible in their regulation and enforcement of the following mortgage servicing rules governing borrower communications: CARES Act forbearance and other short-term options acknowledgment notices, loss mitigation and early intervention notices, and annual escrow statements.
With the incoming administration and rollout of COVID-19 vaccines, we expected some changes to the CFPB’s supervisory and enforcement approach. Early statements by Uejio have indeed heralded a new era for the CFPB. The rescission of these policies is another reflection of the shift in outlook by the Bureau, and it suggests we may soon see examinations focused on COVID-19 issues and related enforcement actions. In particular, we expect to see those issues identified in the CFPB’s Winter Supervisory Highlights and in the special COVID-19 Consumer Complaint Report and for those issues to remain areas of focus moving forward.