CFPB Issues Memo Outlining New Supervision and Enforcement Priorities

The CFPB issued a memo to staff describing its supervision and enforcement priorities under the new administration and rescinded all prior documents on enforcement and supervision priorities.

The memo was issued by the CFPB’s Chief Legal Officer and addresses, among other things:

• Reducing the overall number of supervisory exams by about 50%, promoting conciliation, correction, and remediation of harms subject to consumers’ complaints, and engaging in greater collaborative efforts with supervised entities to resolve problems in a way that provides measurable benefits to consumers;

• Directing about 70% of supervisory activity towards depository institutions (particularly large banks) and about 30% to non-depository financial services providers (compared to about 40% depository and 60% non-depository during the prior administration);

• Focusing on pressing threats and actual fraud against consumers which involve tangible, material, and quantifiable harm or damages to consumers (as opposed to areas where the CFPB might perceive that consumers made the “wrong” choice in connection with a transaction);

• The agency’s highest priority area will be mortgages, and other main areas of focus will include violations related to furnishing data to consumer reporting agencies; consumer debt collection; fraudulent overcharges and fees; and inadequate controls to protect consumer information (e.g., data breaches) which result in actual loss to consumers;

• Targeting violations and seeking redress for military servicemembers, their families, and veterans;

• Seeking monetary remediation for consumers instead of civil money penalties;

• Respecting federalism, deprioritizing participation in multi-state exams and areas where the States exercise ample regulatory and supervisory authority, and minimizing duplicative enforcement where the States are investigating or taking action over the same activity;

• With respect to other federal regulatory agencies, eliminating duplicative supervision or supervision outside of the CFPB’s authority (e.g., mergers and acquisitions; bankruptcy supervision), coordinating exams with other federal regulators, and minimizing duplicative enforcement where another federal regulator is investigating or taking action over the same activity;

• Not pursuing novel legal theories, and instead focusing on areas that are clearly within the CFPB’s statutory authority;

• Not engaging in or facilitating unconstitutional racial classifications or discrimination in connection with fair lending laws, ending redlining or bias assessments based solely on statistical evidence and/or stray remarks that may be susceptible to adverse inferences, and instead only pursuing fair lending matters involving actual intentional discrimination and identifiable victims;

• Deprioritizing activity with respect to “justice involved individuals” (i.e., criminals); medical debt; peer-to-peer platforms and lending; student loans; remittances; consumer data; and digital payments; and

• Using disclosure requirements as a primary consumer protection tool and ending attempts to create “price controls.”

The existence of this memo was previously reported by news outlets, but the memo itself had not been formally released or confirmed by the CFPB at the time.  However, the CFPB has since filed a copy of this memo during ongoing litigation about large-scale layoffs at the agency, confirming its authenticity.