The Consumer Financial Protection Bureau (CFPB) has released a trio of new policies to designed to promote innovation and facilitate compliance within the financial services world.
The No-Action Letter (NAL) Policy is an updated version of a 2016 policy, with the goal of establishing a greater degree of regulatory certainty against potential supervisory or enforcement actions against a company for providing a product or service under certain facts and circumstances. According to the agency, the new NAL Policy provides a more streamlined review process that focuses on the consumer benefits and risks of the product or service in question.
The Trial Disclosure Program (TDP) Policy allows the CFPB to give permission to entities seeking to improve consumer disclosures to conduct in-market testing of alternative disclosures for a limited time. While the Dodd-Frank Act gives the CFPB the authority to provide certain legal protections for entities conducting trial disclosure programs, the new policy seeks to upgrade the application and review process.
The Compliance Assistance Sandbox (CAS) Policy enables the testing of a financial product or service where there is regulatory uncertainty. After the product or service is evaluated by the CFPB for compliance with relevant law, a “safe harbor” from liability is established for specified conduct during the testing period. Approvals under the CAS Policy will provide protection from liability under the Truth-in-Lending Act (TILA), the Electronic Fund Transfer Act and the Equal Credit Opportunity Act (ECOA).
“Innovation drives competition, which can lower prices and offer consumers more and better products and services,” said CFPB Director Kathy Kraninger. “New products and services can expand financial options, especially to unbanked and underbanked households, giving more consumers access to the benefits of the financial system. The three policies we are announcing today are common-sense policies that will foster innovation that ultimately benefits consumers.”