On February 7, 2018, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) published the latest in its growing series of Requests for Information (“RFI”), this one seeking comment on the Bureau’s enforcement process.[1]  As with earlier RFIs, the Bureau recognizes that the enforcement process may impose burdens on regulated entities and is seeking information on how to improve enforcement processes while remaining faithful to the Bureau’s objectives and “ensuring a fair and transparent process for parties subject to [the Bureau’s] enforcement authority.”

This RFI, following on RFIs relating to Civil Investigative Demands[2] and Administrative Adjudications,[3] is further evidence that the CFPB, under new leadership, is closely evaluating a broad range of Bureau activities and their impact on the industry.

While the RFI broadly seeks suggestions on “potential updates or modifications” to the enforcement process,[4] the Bureau emphasizes seven aspects of the process that “may be deserving of more immediate focus.”[5]  Because the CFPB’s enforcement process is a series of inter-related steps, changes to any one of these areas may impact, or be impacted by, changes to other areas.

Before delving into the RFI’s seven focus areas, it is important to recognize an over-arching concern with the Bureau’s enforcement process — namely, the virtual inability to resolve a matter in the supervisory context once it has been referred to the Office of Enforcement.

Inability to Resolve Enforcement Matters Short of Public Enforcement Actions:  The Action Review Committee (“ARC”) and ‘Reverse’ ARC

The Bureau has a formal process — known as the Action Review Committee, or ARC — for moving a matter from a supervisory examination to the Office of Enforcement.  Although the Bureau has taken the position that it technically has a ‘reverse’ ARC process by which matters may be returned to Supervision, this appears to occur on only rare occasions.  The result is that the Office of Enforcement, in practice, appears to have only one means to resolve an issue (other than to drop a case), and that is to bring a public enforcement action.  Meanwhile, the Bureau’s Office of Supervision can address matters through various non-public means, such as a Memorandum of Understanding.Continue Reading CFPB Request for Information Focuses on Concerns about the Enforcement Process