CFPB Passes Policies Promoting Innovation, Compliance

The Consumer Financial Protection Bureau on Tuesday issued three new policies to promote innovation and compliance. 

The CFPB issued the No-Action Letter (NAL) Policy; Trial Disclosure Program (TDP) Policy; and the Compliance Assistance Sandbox (CAS) Policy. 

According to the CFPB, regulatory uncertainty can “hinder the development” of innovative products and services that benefit consumers. 

NALs provide increased regulatory certainty through a statement that the CFPB will not bring a supervisory or enforcement action against a company for providing a product or service under certain circumstances. 

“The new NAL Policy improves on the Bureau’s 2016 NAL Policy by having, among other things, a more streamlined review process focusing on the consumer benefits and risks of the product or service in question.” the CFPB says.  

The CFPB’s first NAL under the new policy is in response to a request by the Department of Housing and Urban Development (HUD) on behalf of more than 1,600 housing counseling agencies (HCA) that partake in HUD’s housing counseling program. 

HUD discussed concerns in 2018 to the CFPB about the HCAs and lenders not entering into agreements that would fund counseling services due to uncertainty of the Real Estate Settlement Procedures Act (RESPA). 

A group of HUD Intermediaries filed a comment letter in February 2019 on the insufficiency of the CFPB’s prior NAL policy and supporting the new on. 

“The no-action letter essentially states that the Bureau will not take supervisory or enforcement action under RESPA against HUD-certified HCAs that have entered into certain fee-for-service arrangements with lenders for pre-purchase housing counseling services,” the release states. “The NAL, which is an exercise of the Bureau’s supervisory and enforcement discretion, is intended to facilitate HCAs entering into such agreements with lenders and will enhance the ability of housing counseling agencies to obtain funding from additional sources.”

The new TDP policy allows entities looking to improve consumer disclosures to conduct in-market testing of alternative disclosures upon permission by the CFPB. 

CFPB's new CAS Policy allows the testing of a financial product of service where there is regulatory uncertainty.