The CFPB will be implementing an advisory opinion program
to provide clear guidance to assist companies in better understanding their legal and regulatory obligations through advisory opinions; amending and reissuing its responsible business conduct bulletin, which articulates that the Bureau intends to provide credit to entities for their responsible conduct based on its extent and significance; and engaging with Congress to advance proposed legislation that would authorize the Bureau to award whistleblowers who report violations of Federal consumer financial law.
The CFPB submitted the proposed legislative language to U.S. House Speaker Nancy Pelosi and U.S. Senate President Michael Pence, as well as the Chairs and Ranking Members of the authorizing committees in both chambers. It would amend Title X of the Dodd-Frank Act and provide authority to establish a whistleblower award program. The incentive created for employees to report wrongdoing to the Bureau will assist in advancing enforcement cases, especially as it relates to fair lending violations. Under the proposed legislation
, in cases where a whistleblower provides voluntary information that leads to a successful enforcement action, the Bureau will be able to pay an award based on a percentage of the monetary sanctions collected in the action.
“These steps reinforce the Bureau’s commitment to preventing consumer harm,” said CFPB Director Kathleen L. Kraninger. “Advisory opinions will ensure that companies know what compliance entails and what constitutes a violation. We also want to incentivize whistleblowers to contact us if they believe their employer is not complying with the law.”
Under the advisory opinion program, parties will submit requests for an advisory opinion to the Bureau via its Web site. The CFPB will issue additional procedures for how requests will be addressed, including how it will prioritize requests. To increase transparency and provide regulatory certainty to all regulated entities and other stakeholders, the Bureau will publish the responding advisory opinion in the Federal Register and on its Web site. The opinion will include an interpretation of the CFPB’s existing rules. Under a current guidance process, responses to individual regulatory inquiries are generally available to the individual requestor. That process will remain available alongside the advisory opinion program, as will the Bureau’s other efforts to provide clear guidance to the public.
The Bureau originally published a responsible business conduct bulletin in June 2013. This newest bulletin updates and strengthens the original bulletin and is intended to clarify the Bureau’s approach to responsible business conduct and emphasize the importance of such conduct. Responsible conduct can improve the Bureau’s ability to promptly detect violations, increase the effectiveness of its supervisory and enforcement work, enable the Bureau to better focus its finite resources, and help more consumers get redress. The bulletin identifies four categories of responsible conduct: Self-assessing, self-reporting, remediation, and cooperation. If an entity meaningfully engages in these activities, the CFPB will favorably consider it, along with other relevant factors, in addressing violations of Federal consumer financial law in supervisory and enforcement matters.
“Responsible conduct is in the public interest,” said Kraninger. “Entities that build a culture of compliance and engage in responsible conduct support consumer protection and the Bureau’s efforts to both prevent harm to consumers and enforce the law against bad actors.”
Mortgage Bankers Association (MBA)
President and CEO Robert D. Broeksmit, CMB, praised the CFPB’s move: “We welcome today’s announcements by the Bureau. MBA has consistently advocated for improved partnership between the Bureau and the firms it regulates, believing that it will ultimately benefit consumers. An advisory regulatory opinion program will offer lenders and servicers more clarity, creating a more consistent understanding of their compliance obligations. Amending the responsible business conduct bulletin encourages lenders to proactively look for, report, and remediate compliance errors, ensuring that consumers get relief faster when mistakes are made. Finally, we look forward to working with Congress and the Bureau on the proposed whistleblower legislation.”