With the upcoming Tech Sprint and the recent joint virtual Innovation Office Hours, the Consumer Financial Protection Bureau (CFPB or Bureau) continues to implement new programs in an effort to encourage innovation. Both programs are administered by the Bureau's Office of Innovation. In addition to the Tech Sprint and the Virtual Office Hours, the Office of Innovation previously introduced the No-Action Letter Policy, the Compliance Assistance Sandbox, and the Trial Disclosure Sandbox.
CFPB Tech Sprints
The CFPB announced its "Tech Sprint" initiative in an effort to "reduce regulatory burden and improve consumer understanding of financial services." There are two sessions planned. The first session, scheduled for October 5-9, 2020, will focus on improving existing consumer disclosures in connection with the Equal Credit Opportunity Act (ECOA) and the Fair Credit Reporting Act (FCRA). The second session focuses on the Home Mortgage Disclosure Act (HMDA) and is planned for March 22-26, 2021.
With the first session, the Bureau is aiming to provide participants with maximum flexibility to explore new solutions and approaches that improve upon existing practices. Participants will not be required to ensure their submissions conform to existing rules, sample forms, or official interpretations. Instead, the critical element for submissions would be for participants' explanation of how their approach and results achieve the following goals:
- Improve the accuracy of information used to take adverse action;
- Prevent and help reveal discrimination on a prohibited basis; and
- Educate consumers about potential improvements they can make for future credit applications.
The second session is geared toward developing new tools to interpret and utilize HMDA data. This is a continuation of the Bureau's efforts to develop an open and transparent code base for the collection and publication of the HMDA Data on behalf of the Federal Financial Institutions Examination Council (FFIEC). Through the second session, the Bureau seeks to expand the utility of HMDA data and tools for consumers and the industry, and increase utilization of new and existing APIs. In particular, the CFPB looks to develop new tools to address compliance challenges, improve the filing process, and develop new APIs and specifications, permitting a more complete integration of compliance software and the HMDA platform.
Additional details regarding both sessions are still being finalized. The CFPB has opened up a sign-up portal where interested parties can signal their interest. This registration is intended to help the Bureau engage with interested parties and other relevant stakeholders in designing and implementing the Tech Sprint. Registrants will have an opportunity to commit to participation at a later stage.
Virtual Office Hours
The Bureau partnered with the Office of the Comptroller of the Currency (OCC) in hosting its virtual Innovation Office Hours on July 29 and 30. These Office Hours gave participants an opportunity to hold one-on-one meetings with representatives from the OCC and the CFPB to discuss various matters related to responsible innovation in financial services. This program is a part of the American Consumer Financial Innovation Network (ACFIN), signaling the Bureau's continued push to enhance coordination among federal and state regulators with regard to innovation, consumer access, competition, and financial inclusion.
While this program was a step forward in providing guidance to industry stakeholders seeking to innovate, its coverage leaves room for improvement. In particular, not every jurisdiction has joined the ACFIN, and non-member jurisdictions may impose requirements that are materially different from those of ACFIN members. Furthermore, even with member jurisdictions, the actual impact of the Bureau's determinations on state enforcement and investigatory decisions remains to be seen. This should not be a roadblock to companies pursuing these new avenues, but they should remain cautious as they proceed.