NAFCU offers four suggestions to improve CFPB’s enforcement processes
WASHINGTON, DC (May 15, 2018) — National Association of Federally-Insured Credit Unions (NAFCU) Regulatory Affairs Counsel Ann Kossachev today sent a letter to the Consumer Financial Protection Bureau (CFPB) reiterating our position that credit unions should not be subject to the bureau’s enforcement authority. In the letter, Kossachev also suggested that the bureau change its enforcement approach to focus on bad actors in the marketplace.
“NAFCU supports the Bureau’s review of its processes and encourages the Bureau to exempt federally-insured credit unions from its enforcement authority under Section 1025 of the Consumer Financial Protection Act of 2010 (CFPA),” said Kossachev. “NAFCU also encourages the Bureau to conduct a comprehensive evaluation of its entire approach to enforcement so that the industry is no longer left figuring out the rules of the road after being subject to an enforcement action.”
In addition to urging the bureau to exempt credit unions from its enforcement authority, Kossachev detailed four suggestions to improve the CFPB’s enforcement processes:
- Further define unfair, deceptive, and abusive acts and practices (UDAAP). Kossachev noted that the Dodd-Frank Act provides broad definitions of prohibited behaviors under UDAAP, and while the CFPB has barely issued any specific guidance on the prohibited practices, the bureau continues to pursue enforcement proceedings under the provision. Kossachev requested that the bureau issue guidance to further clarify “abusive” and “unfair,” and also work with the NCUA to resolve questions related to UDAAP-based enforcement actions.
- Make the Notice and Opportunity to Respond and Advise (NORA) process mandatory. “Parties to an action deserve the ability to present their positions to the Bureau before a determination is made on the enforcement action,” Kossachev wrote. “Making this process mandatory would substantially increase transparency, protect essential due process interests and avoid the appearance of uninformed, one-sided decision-making.”
- Permit entities to make presentations prior to legal proceedings. In addition to allowing parties to submit a written response through the NORA process, Kossachev argued the bureau should also allow them to attend preliminary hearings before a decision is reached on an enforcement action. Doing so “would allow parties to meet face-to-face with Bureau enforcement officials to better understand the allegations against them and lead to a more informed process overall.”
- Make press releases less inflammatory, more focused on facts. Kossachev recommended the bureau adopt a more facts-based approach to press releases related to legal proceedings, similar to other federal financial regulators. She said NAFCU and its members have concerns about the current length and language of press releases, which often aim to invoke an emotional response.
Kossachev was writing in response to the CFPB’s request for information (RFI) on its enforcement processes.
For full text of the letter and recommendations, click here.
About NAFCU
The National Association of Federally-Insured Credit Unions is the only national trade association focusing exclusively on federal issues affecting the nation’s federally-insured credit unions. NAFCU membership is direct and provides credit unions with the best in federal advocacy, education and compliance assistance. For more information on NAFCU, go to www.nafcu.org or @NAFCU on Twitter.
