Difference between regulations, guidance critical for regulators

It is critical for federal regulators, including the Consumer Financial Protection Bureau (CFPB), to appreciate the significant differences in the appropriate role of regulations and of guidance, CUNA wrote Monday. The letter was sent to the CFPB in response to a proposal to codify a joint interagency statement on the role of guidance, and follows a similar communication sent to NCUA last month.

“We appreciate the role of supervisory guidance and support the proposal to codify the 2018 Statement,” the letter reads. “Doing so not only ensures credit unions understand where an examiner is basing its decisions, but also ensures the basis for such decisions is well-founded, given statutes must go through the legislative process and regulations through the rulemaking process under the Administrative Procedure Act.”

The letter also highlights CUNA’s belief that it is important that the CFPB to refrain from using supervisory guidance as a basis for an adverse finding during the examination process.

“Examiners must clearly identify where a requirement or prohibition is expressed in an established law or regulation,” it reads. “With that said, we urge the CFPB to continue examiner engagement in productive discussions with the staff of credit unions subject to its jurisdiction regarding relevant supervisory guidance. Such discussions are particularly helpful when there is confusion regarding a specific regulation and its application to the issue at hand.”