CFPB Releases Ninth Edition of Supervisory Highlights and Announces Changes to Appeals Process
On November 3, 2015, the Consumer Financial Protection Bureau (CFPB) released its ninth edition of Supervisory Highlights, a report which outlines the latest unlawful practices uncovered by the CFPB’s examiners between May 2015 and August 2015.
According to the report, CFPB’s supervisory actions resulted in $107 million in relief to more than 238,000 consumers. These non-public actions are a result of the CFPB’s supervisory actions and are in addition to public enforcement actions that it has taken. The CFPB has supervisory authority over banks and credit unions with more than $10 billion in assets as well as certain nonbanks, including mortgage companies, private student lenders, payday lenders, and other nonbanks that the CFPB designates as “larger participants.” The CFPB has designated “larger participants” that it supervises from the industries of consumer reporting, debt collection, student loan servicing, international money transfers, and auto finance. According to Supervisory Highlights, the CFPB uncovered the following violations in the course of its supervisory actions:
- A student loan servicer allocated partial payments in a manner that maximized fees to the servicer and failed to give consumers choices about how to apply payments.
- Other student loan servicers deceived borrowers about late fees by telling them that the Department of Education would charge late fees when, in fact, the Department of Education does not charge such fees.
- In violation of the Homeowners Protection Act, mortgage servicers failed to automatically terminate mortgage insurance when the principal balances of loans were scheduled to reach 78 percent of the original property values.
- Companies providing information to consumer reporting agencies lacked adequate policies for accurately reporting such information and for responding to disputes.
- Debt collectors employed illegal practices to contact consumers about debt, including failing to identify that they were debt collectors and continuing to contact consumers on the phone at work after consumers told them to stop.
In addition to providing an overview of the CFPB’s supervisory examination findings, the CFPB announced in Supervisory Highlights that it was making changes to its appeals process. Specifically, the CFPB announced the release of a revised appeals process that makes the following changes to the supervisory appeals process as originally published in CFPB Bulletin 2012-07:
- It allows members of the Supervision, Enforcement, and Fair Lending Associate Director’s staff to participate on the appeals committee, replacing the requirement that an Assistant Director serve on the committee
- It permits an odd number of appeals committee members to facilitate resolution of appeals
- It limits oral presentations to issues raised in written appeals
- It provides additional information regarding the appeals process, including the applicable appellate standard the committee will use
- It prohibits companies from appealing adverse findings or an unsatisfactory rating related to an investigation or enforcement action until the investigation or enforcement action has been resolved
- It changes the expected time to issue a written decision related to an appeal from 45 to 60 days
View the ninth edition of the CFPB’s Supervisory Highlights here: http://files.consumerfinance.gov/f/201510_cfpb_supervisory-highlights.pdf.
View the CFPB’s revised supervisory appeals process guidance document here: http://files.consumerfinance.gov/f/201510_cfpb_appeals-of-supervisory-matters.pdf.
Zane Gilmer is a member of the Stinson Leonard Street litigation practice group and works out of the firm's Denver office. His practice focuses on business litigation and compliance. For more information on CFPB's Supervisory Highlights, please contact Zane Gilmer or your usual Stinson Leonard Street LLP contact.