CFPB Issues Supervisory Highlights Focusing on Nonbank Compliance Programs

On May 22, 2014, the Consumer Financial Protection Bureau issued its spring 2014 supervisory highlights report. The report zeros in on the debt collection and consumer reporting industries, highlighting numerous violations uncovered at payday lenders, debt collection firms, and consumer reporting agencies. Specifically, it appears that the CFPB’s largest concerns with these groups surrounds the ever-important compliance management systems (CMS) as well as vendor relationships.

With regard to the CMS, it is clear that the CFPB believes that debt collectors and CRAs must make board approval and higher management oversight an essential item within the CMS. Moreover, oversight of third-party vendors continues to remain important, especially in relation to collection of debt and investigation of disputes and claims.

Considering that only three “larger participant rules” have been previously published – and two of them for consumer reporting and debt collection – the CFPB’s report is not surprising. Historically, the CFPB has made these two industries the target of its efforts.

What is significant, however, is the extraordinary amount of focus placed on these two industries through supervisory and enforcement actions. Through these proceedings, the CFPB is able to “rulemake” without going through the proper legal course of action. And, in fact, the CFPB continues to hold these and other industries responsible for consumer complaints rather than what the law requires of them.