Examinations

Subscribe to Examinations

On September 8, a Texas federal judge ruled that the CFPB exceeded its authority by adopting a sweeping anti-discrimination policy last year. The CFPB adopted the policy in March 2022, via an update to its exam manual, stating that discrimination in any financial product is an “unfair” practice that can trigger liability under the federal prohibition against “unfair, deceptive or abusive acts or practices” or UDAAPs (we discussed this policy in previous posts here and here). The CFPB offered examples of practices that may be unfair because they are discriminatory, including offering one set of products or services to a certain customer demographic and a greater set of products or services to another customer demographic, providing inferior terms to one customer demographic as compared to another customer demographic, and engaging in targeted marketing or advertising in a discriminatory manner.

Continue Reading Texas Court Strikes Down CFPB UDAAP Policy

Last month, the CFPB released new Supervisory Highlights identifying examinations findings in the areas of auto servicing, consumer reporting, credit card account management, debt collection, deposits, mortgage origination, mortgage servicing and payday lending completed between January 1, 2022, and June 31, 2022. Among other highlights, the findings including the following:
…
Continue Reading CFPB Fall Supervisory Highlights Find Credit Reporting Failures, Junk Fees, Mishandling of Covid-19 Protections

On June 28, the American Bankers Association, Consumer Bankers Association, Independent Community Bankers of America, and the U.S. Chamber of Commerce affirmed in a letter to CFPB Director Rohit Chopra that the CFPB should rescind its recent updates to the exam manual allowing for the examination of financial institutions unfair, deceptive, and abusive acts or practices or UDAAPs. The group conveyed to Director Chopra that “Congress did not authorize or intend for the CFPB to “fill gaps” between the clearly articulated boundaries of antidiscrimination statutes with its UDAAP authority.” (We discussed this exam manual update in a previous blog post here).
…
Continue Reading Industry Groups to CFPB: Take Back UDAAP Anti-Discrimination Policy

On May 2, the CFPB released its Spring 2022 Supervisory Highlights. The findings of the report, which generally cover examinations completed between July and December 2021, are issued to help institutions and the general public better understand how we examine institutions for compliance with Federal consumer financial laws.  Highlights include the following findings:…
Continue Reading CFPB Issues Spring 2022 Supervisory Highlights

On May 2, the CFPB published a blog post demonstrating its commitment to “a fair, transparent, and competitive auto lending market” by calling attention to add-on products for which auto dealers and finance companies “often charge consumers all payments for any add-on products as a lump sum at origination of the auto loan, and they generally include the lump sum cost as part of the total vehicle financing agreement.”  CFPB examiners have focused on how servicers manage these add-on product charges when the loan ends prior to when the add-on product’s potential benefits end.
Continue Reading CFPB Blog: Stop Overcharging for Auto Loan Add-on Products

On April 25, the CFPB announced that it is using its “dormant authority” in order to conduct examinations of nonbanks posing risks to consumers.  The Bureau has direct supervisory authority over banks and credit unions, certain nonbanks, in addition to large depository institutions with more than $10 billion in assets, and their service providers.  With this announcement, the CFPB intends invoke its authority under the Dodd-Frank Act to examine nonbanks “whose activities the CFPB has reasonable cause to determine pose risks to consumers. This authority is not specific to any particular consumer financial product or service.” …
Continue Reading FinTechs in Crosshairs as CFPB Invokes Dormant Authority to Examine Nonbanks

In a significant move, the CFPB announced on March 16 a revision to its supervisory operations to address discrimination outside of the traditional fair lending context, with future plans to scrutinize discriminatory conduct that violates the federal prohibition against “unfair” practices in such areas as advertising, pricing, and other areas to ensure that companies are appropriately testing for and eliminating illegal discrimination.  Specifically, the CFPB updated its Exam Manual for Unfair, Deceptive, or Abusive Acts or Practices (UDAAPs) noting that discrimination may meet the criteria for “unfairness” by causing substantial harm to consumers that they cannot reasonably avoid.
Continue Reading Regulation by Definition: CFPB Broadens Definition of “Unfairness” to Rein in Discrimination

On January 20, the CFPB announced that it would begin examining the operations of post-secondary schools that offer private loans directly to students and update its exam procedures to include a new section on institutional student loans.  The CFPB highlights its concern about the student borrower experience in light of alleged past abuses at schools that were previously sued by the CFPB for unfair and abusive practices in connection with their in-house private loan programs. …
Continue Reading CFPB to Examine College Lending Practices

The CFPB updated its Supervision and Examination Manual by adding a new section titled Compliance Management Review – Information Technology.  The new examination procedures are meant to assist CFPB examiners when assessing an entity’s information technology (IT) controls as part of a Compliance Management System (CMS) review.  Among other things, the new exam procedures outline the following five modules:  (i) Board and Management Oversight; (ii) Compliance Program; (iii) Service Provider Oversight; (iv) Violations of Law and Consumer Harm; and (v) Examiner Conclusions and Wrap-Up.  Each module focuses on the components of a compliance program and the IT function, including policies and procedures, training, monitoring and/or audit, and consumer complaint response. …
Continue Reading CFPB Updates Supervision and Examination Manual, Adds IT Examination