CFPB Issues Guidelines on How to Respond to an Investigation

The Consumer Financial Protection Bureau (CFPB) has recently issued a bulletin that advises banks and other financial firms how to respond to the CFPB’s investigations to minimize risk of punishment.  This bulletin outlines the CFPB’s view of “responsible business conduct” to prevent inquiries from escalating into enforcement actions and to encourage activity that has substantial benefits for consumers and contributes to the Bureau’s mission. The CFPB provided four factors that are used to evaluate responsible conduct and may favorably impact the ultimate resolution of the investigation:

  1. Self-policing.  The size and scope of consumer harm can be limited if a party has robust compliance management system, including self-monitoring and self-auditing, that may detect potential violations early.
  2. Self-reporting.  Prompt and complete self-reporting of significant or potential violations to the CFPB could substantially advance CFPB’s protection of consumers and reduce the resources it must expand to identify potential or actual violations.
  3. Remediation.  The CFPB’s remedial priorities include obtaining full redress for those injured by the violations and making sure that the party who violated the law implements measures to prevent the violations from occurring again.
  4. Cooperation.  A party who has committed a violation must take substantial and material steps in its interactions with the CFPB, above and beyond what the law requires.

The bulletin also contains a list of questions for each factor which the CFPB will examine to determine whether a party followed “responsible business conduct”.  To access these questions and detailed information from the bulletin, please follow this link: http://files.consumerfinance.gov/f/201306_cfpb_bulletin_responsible-conduct.pdf