Financial Services Law Developments: FYI: CFPB Issues Final "No Action Letter" Policy Without Substantial Change

Monday, February 22, 2016

FYI: CFPB Issues Final "No Action Letter" Policy Without Substantial Change

The federal Consumer Financial Protection Bureau (CFPB) recently issued its final policy regarding "no action letters."

A copy of the final policy is available at: http://files.consumerfinance.gov/f/201602_cfpb_no-action-letter-policy.pdf

The final policy establishes a process to apply for non-binding statements from the CFPB as to whether it has any "present intention to recommend initiation of an enforcement or supervisory action against the requester with respect to a specified matter" involving "innovative financial products or services that promise substantial consumer benefit where there is substantial uncertainty whether or how specific provisions of statutes implemented or regulations issued by the [CFPB] would be applied."

As you may recall, the CFPB proposed the policy in October of 2014. The CFPB declined to make changes to its proposed policy in light of many of the comments received.

For example, the CFPB:

· Declined to allow NALs when the matter does not involve an emerging product or service, or does not involve substantial regulatory uncertainty

· Declined to adopt a specific timetable for approval or denial of a "no action letter" (NAL) after an application has been submitted

· Declined to specifically include statements as to no-action treatment of unfair, deceptive, or abusive acts or practices (UDAAP) matters

· Declined to make its no-action process binding on other regulators

· Declined to change its application requirements to "identify the particular provisions of statutes or regulations about which NAL treatment is being requested, state why NAL treatment is necessary and appropriate to remove substantial regulatory uncertainty, and provide a candid explanation of potential consumer risks

· Declined to require its staff to provide specific reasons for declining to provide NALs

· Declined to provide NALs to third parties that may be associated with an applicant's product or service (including trade groups), or to third party applicants as to their dealings with another company's product or service

The CFPB noted that "[d]enials of a request for a NAL generally would not be published," but "because a circumstance may arise in which publication of a denial would be in the public interest, the [final policy] does not categorically rule out publication of denials."

The CFPN also noted that "a NAL is subject to subsequent revocation or modification in the discretion of Bureau staff, and may be immediate upon notice."

Ralph T. Wutscher
Maurice Wutscher LLP
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The Editor's Bio

Ralph T. Wutscher
Maurice Wutscher LLP
20 N. Clark Street, 33rd Floor
Chicago, Illinois 60602
Direct: (312) 493-0874
RWutscher@MauriceWutscher.com
https://www.MauriceWutscher.com/

Ralph Wutscher's practice focuses primarily on representing depository and non-depository mortgage lenders and servicers, as well as mortgage loan investors, distressed asset buyers and sellers, loss mitigation companies, automobile and other personal property secured lenders and finance companies, credit card and other unsecured lenders, and other consumer financial services providers. He represents the consumer lending industry as a litigator, and as regulatory compliance counsel.

Ralph has substantial experience in defending private consumer finance lawsuits, including cases ranging from large interstate putative class actions to localized single-asset cases, as well as in responding to regulatory investigations and other governmental proceedings. His litigation successes include not only victories at the trial court level, but also on appeal, and in various jurisdictions. He has successfully defended numerous putative class actions asserting violations of a wide range of federal and state consumer protection statutes. He is frequently consulted to assist other law firms in developing or improving litigation strategies in cases filed around the country.

Ralph also has substantial experience in counseling clients regarding their compliance with federal laws, and with state and local laws primarily of the Midwestern United States. For example, he regularly provides assistance in connection with portfolio or program audits, consumer lending disclosure issues, the design and implementation of marketing and advertising campaigns, licensing and reporting issues, compliance with usury laws and other limitations on pricing, compliance with state and local “predatory lending” laws, drafting or obtaining opinion letters on a single- or multi-state basis, interstate branching and loan production office licensing, evaluations and modifications of new or existing products and procedures, debt collection and servicing practices, proper methods of responding to consumer inquiries and furnishing consumer information, as well as proposed or existing arrangements with settlement service providers and other vendors, and the implementation of procedural or other operational changes following developments in the law.

Ralph is a member of the Governing Committee of the Conference on Consumer Finance Law. He is also the immediate past Chair of the Preemption and Federalism Subcommittee for the ABA's Consumer Financial Services Committee. He served on the Law Committee for the former National Home Equity Mortgage Association, and completed two terms as Co-Chair of the Consumer Credit Committee of the Chicago Bar Association.

Ralph received his Juris Doctor from the University of Illinois College of Law, and his undergraduate degree from the University of California at Los Angeles (UCLA). He is a member of the national Mortgage Bankers Association, the American Bankers Association, the Conference on Consumer Finance Law, DBA International, the ACA International Members Attorney Program, as well as the American and Chicago Bar Associations.

Ralph is admitted to practice in Illinois, as well as in the United States Court of Appeals for the Seventh Circuit, the United States District Courts for the Northern and Southern Districts of Illinois, and the United States District Court for the Eastern District of Wisconsin, and has been admitted pro hac vice in various jurisdictions around the country.