Compliance   

CFPB Holds First Public Symposium

As promised, on June 25th the CFPB held its first in a series of symposium designed to stimulate a public dialogue with experts that will yield ‘common sense ideas’ to inform the CFPB’s policy development process.

This first discussion was on how to clarify the meaning of ‘abusiveness,’ which the CFPB has the power to prohibit as an ‘unfair, deceptive or abusive act or practice’ (sometimes referred to as UDAAP) under the Dodd-Frank Act if it meets certain threshold requirements.

CFPB officials characterized the topic as central to the Bureau’s mission to protect consumers. The Federal Trade Commission has a long history of protecting consumers from ‘unfair and deceptive’ acts and practices under the FTC Act, along with case law interpreting the margins of its authority. On the other hand, the ‘abusive’ standard in the Dodd-Frank Act takes up just a few lines and has not been otherwise defined or heavily enforced by the CFPB.

Symposium panelists were divided on whether further definition would be useful. One viewpoint is that the definition of ‘abusive’ in the Dodd-Frank Act is already sufficiently clear, and that further bright-line guidance would limit availability of financial products in the marketplace. The opposite viewpoint is that a more detailed definition, paired with consistent enforcement by the CFPB, would bring more certainty for all parties (the financial services industry, the CFPB and consumers).

The form of potential future CFPB guidance was also at issue. Panelists noted that ‘guidance through enforcement’ was a blunt tool that could yield inconsistent findings that are driven mostly by the facts of the individual case, and that recent actions seemed to conflate ‘abusiveness’ with the better-defined formulation of ‘unfair and deceptive’ acts and practices. The CFPB has direct authority in the Dodd-Frank Act to prescribe rules to better identify prohibited ‘abusive’ acts and practices, but one panelist noted that the preliminary step of more informal guidance, perhaps in the form of a policy statement, could serve as a ‘rough draft’ of future regulations.

The CFPB also announced additional symposia beginning later this year on behavioral law and economics, small business loan data collection, disparate impact and the Equal Credit Opportunity Act, cost-benefit analysis, and consumer-authorized financial data sharing.

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In this blog post concerning legal and regulatory matters of interest to the mortgage industry, Sandler Law Group (SLG) provides general information and industry observations that are not motivated by or concerned with a particular past occurrence or event, or a specific existing legal problem of which SLG is aware. Nothing published herein is intended to constitute legal advice and the use of the blog post by a reader shall not give rise to an attorney-client relationship with SLG. SLG expressly disclaims any representation of accuracy or reliability as to the content of this blog post, as well as any obligation to maintain such content over time or to ensure it is free from errors. Brad Cope is the attorney responsible for the SLG content of this blog post. The attorneys of SLG are not certified by the Texas Board of Legal Specialization. 

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