NAFCU Sends Letter to CFPB Suggesting Changes to Enforcement Process

This week, Ann Kossachev, on behalf of the National Association of Federally-Insured Credit Unions, sent a letter to the Consumer Financial Protection Bureau outlining suggested changes to the Bureau’s enforcement processes. The letter came in response to a formal Request for Information from the CFPB seeking input on how the agency can reduce the burden and improve the efficiency of its enforcement processes.

NAFCU bills itself as the only national trade organization focusing exclusively on federal issues affecting the nation’s federally-insured credit unions.

The letter urged the CFPB “to completely change its approach to enforcement to focus on pursuing bad actors in the marketplace and providing the industry with guidance, particularly with respect to its unfair, deceptive, and abusive acts and practices (UDAAP) authority.”

At present, under the Dodd-Frank Act, the CFPB has been relying on broad definitions of prohibited behavior under its UDAAP provisions. This, in some situations, has left many in the financial services industry unsure of what actually constitutes a UDAAP and, therein, a UDAAP violation. NAFCU’s letter suggests that the CFPB begin any evaluation of its enforcement policies by initiating a rulemaking to define the scope of its UDAAP authority. The CFPB’s use of UDAAP has been an issue for tribal lenders in the past when the agency attempted to utilize the enforcement standard to harm tribal sovereignty.

NAFCU also recommended that the Bureau’s Notice and Opportunity to Respond and Advise (NORA) process be made mandatory, and that entities subject to enforcement have a sufficient amount of time to respond. Furthermore, it requests preliminary hearings before the Bureau comes to an enforcement decision, and suggests that CFPB press releases take a more neutral tone, using less inflammatory language and focusing simply on the facts of the case.