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CFPB Focuses on Auto Loan, Mortgage Servicing in Latest Supervisory Highlights Report – ACA International


The Consumer Financial Protection Bureau released its examination findings and updates on public enforcement actions as well as recent bureau rules and guidance for June 2018 through November 2018, a period just before Director Kathy Kraninger started her five-year term.

The 18th edition of the report released by the bureau covers supervision activities completed between June and November last year and includes examination findings in the areas of automobile loan servicing, deposits, mortgage servicing, and remittances, according to a news release.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the bureau is authorized to supervise banks and credit unions with more than $10 billion in assets, as well as certain nonbanks.

The report shares information regarding general supervisory and examination findings and the bureau’s supervisory program but does not impose any new or different legal requirements than those in relevant laws and regulations. The information is disseminated to help institutions better understand how the bureau examines institutions for compliance, according to the CFPB news release.

Public enforcement actions in the report include a settlement with Cash Tyme, a payday retail lender, for violations of the Consumer Financial Protection Act (CFPA); a settlement with online lender Enova International Inc., for CFPA violations including debiting consumers’ bank accounts without authorization; a settlement with State Farm Bank for violations of the Fair Credit Reporting Act, Regulation V, and the CFPA by obtaining consumer reports without a permissible purpose; a settlement with Santander Consumer USA LLC for CFPA violations such as failure to properly disclose the impact on consumers of obtaining a loan extension; and a settlement with Cash Express LLC for violating the CFPA’s prohibition on deceptive acts or practices by threatening legal action in consumers in collection letters.

The report’s findings represent alleged problems at individual companies and are not necessarily indicative of the practices of the entire accounts receivable management industry or other financial services industries. The report provides guidance to industry participants on how their operations can remain in compliance with the consumer financial laws and includes examples of common opportunities for improvement.

Supervision Program Developments and Recent CFPB Rules and Guidance

  • Changes to types of supervisory communications

On Sept. 25, 2018, the bureau issued a bulletin to announce changes to how it articulates supervisory expectations to institutions in connection with supervisory events. The bulletin notes that the bureau will continue to communicate findings to institutions in writing by way of examination reports and supervisory letters. However, effective immediately, those reports and letters will include two categories of findings that convey supervisory expectations. Matters Requiring Attention will continue to be used to communicate to an institution’s Board of Directors, senior management, or both, specific goals to be accomplished in order to correct violations.

A new findings category—Supervisory Recommendations (SRs)—will be used by the bureau to recommend actions for management to consider taking if it chooses to address the bureau’s supervisory concerns related to compliance management systems. SRs will be used when the bureau has not identified a violation of federal consumer financial law but has observed weaknesses in a compliance management system.

  • Statement on supervisory practices regarding financial institutions and consumers affected by a major disaster or emergency

On Sept. 14, 2018, the bureau issued a statement highlighting the existing laws and regulations that can provide supervised entities regulatory flexibility to take certain actions that can benefit consumers in communities under stress and hasten recovery considering major disasters or emergencies. In the statement, the bureau also noted that it will consider the impact of major disasters or emergencies on supervised entities themselves when conducting supervisory activities.

  • Interagency Statement on the Role of Supervisory Guidance

On Sept. 11, 2018, the bureau, along with the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency issued a joint statement explaining the role of supervisory guidance and describing the agencies’ approach to supervisory guidance. Among other things, the joint statement confirms that supervisory guidance does not have the force and effect of law, and the agencies do not take enforcement actions based on supervisory guidance. The joint statement also explains that supervisory guidance outlines the agencies’ supervisory expectations or priorities and articulates the agencies’ general views regarding appropriate practices for a given subject area.

Read the complete Supervisory Highlights report from the bureau here.

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