CFPB Report Shows Need to Clarify Examination Process

The Consumer Financial Protection Bureau (CFPB) Tuesday made available the most recent annual report from its Ombudsman, the internal advocate of “a fair process between consumers, financial entities, and the CFPB.” Among the recommendations is increased clarity from the Bureau to companies under an active examination.

In Fiscal Year 2013 (ended September 30, 2013), the Ombudsman heard concerns from financial entities and their trade groups regarding CFPB’s supervisory examinations to include how a financial entity may elevate concerns about the examination and what may be expected during the examination lifecycle,  at the end of the onsite, and at the end of the entire examination.

The Ombudsman reviewed the CFPB’s examination processes to include the examination manual as well as templates used for correspondence with financial entities. The Ombudsman considered various perspectives by meeting with CFPB leaders, financial entities, outside attorneys, and trade groups, and shared possible recommendations to the CFPB to obtain feedback on them.

The Ombudsman provided recommendations to further standardize and clarify what a financial entity may expect in an examination. The Ombudsman recommended that the CFPB share how a financial entity may elevate concerns about the examination process by:

• providing specific information on who composes the examination team through the Regional Director;
• supplementing the Information Request template (which provides the Examiner-In-Charge (EIC) point of contact for the Information Request and shares about interagency coordination) to mention the EIC as the point-of-contact to address any concern during the examination lifecycle such as data format, data scope, and follow-up information requests.

In addition, the Ombudsman recommended that the CFPB clarify what may be expected during the examination lifecycle by:

• including citations to the examination manual in written communications to a financial entity, where relevant;
• describing in the opening letter the document an entity may expect at the end of the examination process;
• reaching back to inform the entity of the examination status at regular intervals after the conclusion of the onsite portion of the examination;
• co-locating the appeals bulletin with the examination manual on consumerfinance.gov.

The report noted that this year the Ombudsman will be visiting a financial entity’s operations and shadowing a CFPB examination to further learn about the process and help it make additional recommendations.

The CFPB’s Ombudsman has already had an impact on examination procedures. In October, the Bureau announced that it would no longer be sending enforcement attorneys on examinations, a move that began with a suggestion from the Ombudsman.