CFPB Clarifies Treatment of ‘Compliance Aids’
The Consumer Financial Protection Bureau yesterday issued a Policy Statement announcing a new designation for certain Bureau guidance materials, referred to as “Compliance Aids.”
The Mortgage Bankers Association welcomed the statement ( https://www.govinfo.gov/content/pkg/FR-2020-01-27/pdf/2020-00648.pdf), noting it has long held that the purpose of CFPB guidance is to provide clarity to existing regulations, and not create new, unclear regulatory obligations.
Effective Feb 1, the Bureau intends to establish a new category of materials that are similar to previous compliance resources but will now be designated as “Compliance Aids.” This designation “will provide the public with greater clarity regarding the legal status and role of these materials,” the Bureau said.
The statement noted the Bureau does not intend to use Compliance Aids to make decisions that bind regulated entities. “Unlike the Bureau’s regulations and official interpretations, Compliance Aids are not ‘rules’ under the Administrative Procedure Act,” the Bureau said. “Rather, Compliance Aids present the requirements of existing rules and statutes in a manner that is useful for compliance professionals, other industry stakeholders and the public.”
The Bureau said Compliance Aids could also include practical suggestions for how entities might choose to go about complying with those rules and statutes, noting they “may not address all situations. Where there are multiple methods of compliance that are permitted by the applicable rules and statutes, an entity can make its own business decision regarding which method to use, and this may include a method that is not specifically addressed in a Compliance Aid.”
Importantly, said Justin Wiseman, MBA Associate Vice President and Regulatory Counsel, regulated entities—i.e., mortgage banks—are not required to comply with the Compliance Aids themselves. Regulated entities are only required to comply with the underlying rules and statutes. Compliance Aids are designed to accurately summarize and illustrate the underlying rules and statutes. Accordingly, when exercising its enforcement and supervisory discretion, the Bureau does not intend to sanction, or ask a court to sanction, entities that reasonably rely on Compliance Aids.
“In form, Compliance Aids will resemble previously issued compliance resources–e.g. the Bureau’s small entity compliance guides, instructional guides for disclosure forms, compliance checklists, etc.,” Wiseman said. “While the policy statement does not alter the legal status and role of previous guidance materials issued without the Compliance Aid designation, the Bureau may reissue certain existing materials as Compliance Aids.”
And crucially, Wiseman added, under the new policy the Bureau “makes clear that it does not intend to pursue administrative or judicial sanctions against entities that reasonably rely on Compliance Aids.”
Wiseman said MBA has long advocated for greater clarity on the appropriate role of guidance. “Specifically, MBA’s position has been that while regulated entities should be able to rely on guidance to establish compliance, guidance should not be used to create new obligations or be the sole method for compliance,” he said. “Today’s statement…indicates that the Bureau appears to have adopted a similar view.”
