Effective April 1, 2021, the Consumer Financial Protection Bureau ("Bureau") rescinded a series of policy statements granting temporary flexibility to financial institutions during the COVID-19 crisis. Instead, the Bureau provided notice that it intends to exercise the full scope of its supervisory and enforcement authorities to protect consumers from harm as provided by the Dodd-Frank Act. Acting Director David Uejio justified the Bureau's change in policy direction by stating that many financial institutions have already had a year to adjust to the pandemic, and that as "many financial institutions have developed more robust remote capabilities and demonstrated improved operations, it is no longer prudent to maintain these flexibilities".
Among other changes, the Bureau rescinded statements that eased reporting requirements for financial institutions during the pandemic. Instead the Bureau will now require financial institutions to resume providing information to the Bureau as required by law. For the mortgage lending industry, this means that the Bureau will collect the 2021 first quarter mortgage lending data as required by the Home Mortgage Disclosure Act on or before May 31, 2021. For financial institutions that issue credit cards or prepaid accounts, the Bureau will require these institutions to continue submitting quarterly and annual information as required by Regulation Z, Regulation E, and TILA. This includes submitting pricing and availability data for credit cards, as well as information about account agreements with consumers and affiliated organizations.
Additionally, the Bureau provided notice that it intends to exercise its supervisory and enforcement authorities to protect consumers and ensure that the market for financial products and services are fair, transparent and competitive. For example, the Bureau rescinded E-Sign Act flexibility, and may exercise supervisory and enforcement actions under TILA and Regulation Z to ensure that credit card issuers obtain full E-Sign consent, ensure that creditors meet their obligations to effectively resolve billing errors for consumers, and ensure that consumer reporting agencies and furnishers comply with the FCRA and Regulation V.1
The Bureau also rescinded a 2018 Bulletin, which alters how examiners communicate supervisory expectations with financial institutions. Effective April 1, 2021, the Bureau announced that it would no longer issue formal written Supervisory Recommendations but will instead rely on Matters Requiring Attention ("MRAs"). Unlike Supervisory Recommendations, MRAs are more specific and include timeframes for periodic reporting and timelines for implementation, so that companies can address the Bureau's specific goals relative to a violation of consumer financial laws.
These recessions are the initial steps towards a Bureau that is more focused on protecting consumers from harm. We will continue to monitor for new developments and additional guidance from the Bureau.
[1] The Bureau noted in footnote 3 of the policy rescission that it does not intend to initiate an enforcement action or cite against any entity that did not comply with FCRA and Regulation V requirements between April 1, 2020 and March 31, 2021. Additionally, the rescission leaves intact the section entitled "Furnishing Consumer Information Impacted by COVID-19".