CFPB Unveils & Explains New Supervision and Examination Manual
WASHINGTON, D.C. — The Consumer Financial Protection Bureau recently released the CFPB Supervision and Examination Manual — a guide for examiners to use in overseeing companies that provide consumer financial products and services such as auto loans.
CFPB's manual is geared to provide its examiners with direction on how to determine if providers of consumer financial products and services are complying with consumer protection laws — and how to determine if the providers have adequate policies and procedures in place to comply with these laws.
For example, the manual incorporates examination procedures long used by other federal regulators to check for compliance with laws such as the Truth in Lending Act. The manual also designed to help ensure CFPB is applying the law consistently across every official it supervises.
"Among other things, we will look at sales and marketing materials and disclosures given to consumers," CFPB officials explained.
"We will review whether required information is presented in a clear and conspicuous manner in advertisements consistent with applicable law," they continued. "And, we will review whether the required information in account disclosures, such as costs to the consumer, is accurate and consistent with applicable law."
In addition to the manual, the CFPB also released its examination procedures for mortgage servicing. During the coming weeks and months, the bureau intends to release more guides like the mortgage servicing offering that can explain specific examination procedures organized by product and line of business.
The CFPB pointed out it is making the general exam manual and servicing procedures public so that financial services providers know what to expect during their examinations, and so that the public knows how the department is fulfilling responsibilities.
"We want to build a constructive relationship with the companies we supervise, and we understand the importance of establishing expectations up-front," officials stated.
"To this end, we sent a letter this week to the banks, thrifts and credit unions we will be supervising, letting them know we issued these documents," they continued.
CFPB said it will use the manual initially to examine the more than 100 "large" banks, thrifts and credit unions, as well as their affiliates that are subject to CFPB supervision. These insured depository institutions are defined as large when they have total assets of more than $10 billion. Officials believe they control the majority of bank assets in the country and interact with the majority of consumers.
Furthermore, the CFPB plans to examine the largest of the large banks on a continuing basis.
"We will examine other banks periodically," officials interjected. "When we are ready, our examiners will also use this manual as a tool to look at other providers of consumer financial products and services that are not depository institutions, such as mortgage lenders, payday lenders and private education lenders.
"Our goal is to help promote fair, transparent and competitive consumer financial markets where consumers can have access to credit and other products and services and where providers can compete for their business on a level playing field where everyone has to play by the rules," CFPB officials went on to say.
The CFPB wrapped up its latest update by offering more clarity on what's to come from the bureau.
"As we continue to stand-up the CFPB and bring on more expert examiners and staff, we will focus our efforts where consumers are most at risk and where our oversight will have the greatest impact," officials noted.
"We consider the manual an evolving document and we welcome feedback from industry representatives and participants, consumer groups and members of the public," they continued. "And, of course, we will inform you about our supervision progress on a regular basis."
The CFPB's Supervision and Examination Manual can be found here.