responding after the cfpb examination
TRANSCRIPT
Responding After the CFPB Examination
Justin B. Hosie
1. The exit interview and waiting
2. Factual confirmation
3. The report
4. The timeline
5. Responding
6. The changes required
7. Addressing issues internally
8. Awaiting more from the CFPB
Overview
What happens when the CFPB leaves?
Opportunity for an exit interview Always take the opportunity Glean some insights into potential problem areas
Several clients have reported feeling great at the exit interview and feeling surprised at the exam report
Long and unpredictable wait times after exams
Will you receive any info before the exam report?
Yes Key Example: “Verification of Facts Memos”
CFPB effort to verify the facts as CFPB understands them and
Give you a chance to clarify and supplement• Directed to focus on facts as in-place during the
examination period • Responses focused on future plans have very little
impact Relatively short time-frame (appx 1 week)
What does a report look like? Template:
http://www.consumerfinance.gov/f/201405_cfpb_exam-report-supervisory-templates.pdf
Some variations and changes to this template over time Key Considerations
Confidential - 12 CFR Part 1070 Conclusions and Comments
• Risk Assessment Score• Consumer Compliance Rating• Matters Requiring Attention: Immediate to 180
Days Review and Findings
How much time is there to respond?
General Timeline 0-10 Days: Cease stated practices - Expect a CID 30-60 Days: Often provided to “develop
remediation” plans 90-180 Days: Develop comprehensive programs
Ambiguity. Undated directions sometimes appear to be requirements, outside of the official “matters requiring attention” section.
How do you respond? Your Board. Correspondence from the
Company’s Board of Directors / Members, etc. Minimal Extensions. CFPB has allowed
reasonable extensions when time periods fall on weekends and holidays, to the next business day
Be Punctual and Realistic. Develop a template and meet every deadline
Don’t overpromise Establish reasonable timelines when responding on
plans
What is typically required? CFPB “supervisory highlights” Spring 2014, Summer 2013
, Winter 2013, and Fall 2012. Examples:
good compliance policies, but no follow-through inadequate resources for compliance department lack of communication to personnel lack of training lack of Board supervision operations policies don’t match compliance policies no comprehensive service provider management
program deficient fair lending compliance program; employee
discretion problem failure to provide NOAA FDCPA and Third-Party Collections
What is the impact internally? Resources
To respond: Time demands on internal and external legal and compliance team
To implement• Documents. Revising policies, procedures, training,
auditing documentation• People. Typically requires more staff:
• compliance personnel• training staff• compliance audit staff
• Outside Audit / Review. Cost of outside compliance auditing
What else can you expect after? Various possibilities, depending on
circumstances:
“Notice and Opportunity to Respond and Advise” (NORA)
Await possible negotiations on• Memorandum of Understanding• Possible Civil Investigative Demand• Enforcement action (lawsuit)
Some hear very little until the next exam
Contact InformationJustin B. Hosie
Hudson Cook, LLP
6005 Century Oaks Drive
Suite 500
Chattanooga, TN 37416
(423) 490-7564