CFPB Rescinds Pandemic-Related Flexibilities
As COVID-19 vaccines roll out and people return to their pre-pandemic work schedules, the obligations of compliance officers may also be returning to “normal” as some of the crisis-related flexibilities are reversed. Last week, the Consumer Financial Protection Bureau (CFPB) announced it was rescinding several statements regarding COVID-19 regulatory flexibility provided last spring. In his statement, Acting Director Uejio stated, “[b]ecause many financial institutions have developed more robust remote capabilities and demonstrated improved operations, it is no longer prudent to maintain these flexibilities.” The rescission notices issued by the bureau all contain guidance on how affected financial institutions can comply with regulatory requirements now that the CFPB will no longer recognize the flexibilities provided last year. Below is a short summary for each of the statements, all rescinded as of April 1, 2021:
Statement on Bureau Supervisory and Enforcement Response to COVID-19 Pandemic - Last year, the bureau stated it would consider pandemic-related staffing and other resource challenges faced by financial institutions in deciding to bring supervisory or enforcement action. The bureau also expressed efforts to consider a financial institution’s good faith efforts to comply with regulations and assist members. The bureau now finds that financial institutions have adjusted and modified their operations to deal with pandemic-related concerns and should now be supervised in accordance with the CFPB’s usual processes.
Statement on Supervisory and Enforcement Practices Regarding Quarterly Reporting Under the Home Mortgage Disclosure Act - In March 2020, the CFPB released a notice stating it would not issue an exam finding or bring enforcement action against financial institutions that fail to file quarterly HMDA data. The bureau states that institutions have had enough time to adjust and are now in a better position to continue daily operations while fulfilling reporting obligations under HMDA.
Statement on Supervisory and Enforcement Practices Regarding CFPB Information Collections for Credit Card and Prepaid Account Issuers - Last spring, the bureau stated it would not bring action against financial institutions for failure to submit certain documents under Regulations E and Z. These included quarterly submissions of credit card agreements and submission of prepaid account agreements. In its rescission statement, the CFPB noted that credit card and prepaid account issuers have shifted operations and can now resume submission of these documents.
Statement on Supervisory and Enforcement Practices Regarding the Fair Credit Reporting Act and Regulation V in Light of the CARES Act – Flexibility was provided in 2020 with regards to following the Fair Credit Reporting Act (FCRA) and Regulation V. Specifically, the CFPB stated it would be flexible in its enforcement and supervision by considering an institution’s good faith effort to comply with the FCRA. The CFPB is now rescinding that guidance. However, the rescission does not alter the original guidance encouraging institutions to continue furnishing consumer report information, especially for consumers who have avoided delinquency by using a modified loan agreement.
Statement on Supervisory and Enforcement Practices Regarding Certain Filing Requirements Under the Interstate Land Sales Full Disclosure Act (ILSA) and Regulation J – Last year, the bureau offered relief in connection with certain reports required to be filed by land developers who are subject to the Interstate Land Sales Full Disclosure Act (ILSA). That relief has been rescinded and all regular reports are required to be submitted moving forward.
Statement on Supervisory and Enforcement Practices Regarding Regulation Z Billing Error Resolution Timeframes in Light of the COVID-19 Pandemic – In May 2020, the CFPB stated it would not bring action against financial institutions that failed to resolve billing errors within the required amount of time under Regulation Z if they showed a good faith effort in complying with the rule. The bureau explained that disruptions caused by the pandemic made it more difficult for institutions to collect the necessary information, complete investigations, and handle billing error notices in timely manner. However, now that they have adjusted to the virtual environment and have updated procedures, financial institutions are required to follow the billing error resolution timeframes outlined in Regulation Z.
Statement on Supervisory and Enforcement Practices Regarding Electronic Credit Card Disclosures in Light of the COVID-19 Pandemic – Relief from E-SIGN requirements was made available for certain credit card account requests made over the phone. Specifically, in some circumstances a card issuer was permitted to send electronic disclosures after receiving a consumer’s oral consent to electronic delivery of the written disclosures and oral affirmation of the consumer’s ability to access the disclosures. The bureau now finds that financial institutions are better prepared to offer consumers relief while following all the required steps of E-SIGN before sending electronic disclosures.
In addition to rescinding the bureau’s own pandemic-related guidance issued in 2020, the bureau has also removed itself as a signatory to the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus and the Interagency Statement on Appraisals and Evaluations for Real Estate Related Financial Transactions Affected by the Coronavirus. This shift is consistent with the bureau’s plans to regulate financial institutions to the fullest extent as allowed under the Dodd-Frank Act. Our Compliance Team will continue to monitor and report regulatory developments coming from the bureau.
About the Author
Loran Jackson joined NAFCU as Regulatory Compliance Counsel in April 2019 and was named Senior Regulatory Compliance Counsel in February 2021. In her role, she provides daily compliance assistance to member credit unions on a variety of topics. She also writes articles for NAFCU publications and presents at NAFCU conferences