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The Consumer Financial Protection Bureau (the "CFPB" or "Bureau") issued its Final Rule ("Rule") on July 5, 2012, adopting its Proposed Rule, without modification, regarding the confidential treatment of information by adding a new section providing that the submission by any person of any information to the Bureau in the course of the Bureau's supervisory or regulatory processes does not waive or otherwise affect any privilege such person may claim with respect to such information under Federal or State law as to any other person or entity.
Also, the CFPB has amended its regulations to provide that its provision of privileged information to another Federal or State agency does not waive any applicable privilege, whether the privilege belongs to the CFPB or any other person.
The Final Rule implements the Proposed Rule, without modification, regarding the confidential treatment of information. The effective date is August 6, 2012.
To put the Final Rule in context, you might want to read my April 2012 review of the CFPB's Proposed Rule with respect to the treatment of privileged information. Entitled "The CFPB's Treatment of Confidentiality and Privilege" (April 2012), my article outlined important considerations and also offers an Action Plan.
"CFPB's Treatment of Confidentiality and Privilege"
Newsletter: HERE. (Abbreviated Version - March 2012)
Website Article: HERE . (Full Text - March 2012)
Article Download: HERE. (Publication - April 2012)
On March 15, 2012, the CFPB published a notice and request for comment regarding its proposal to add a new section to its rules relating to the confidential treatment of information that would provide that any person's submission of information to the CFPB in the course of the CFPB's supervisory or regulatory processes will not waive any privilege such person may claim with respect to such information as to any other person or entity.
According to the CFPB, the proposed rule was intended to provide protections for the confidentiality of privileged information substantively identical to the statutory provisions that apply to the submission of privileged information to the prudential regulators, and State and foreign bank regulators.
In effect, the notice of proposed rulemaking reiterated the position set forth in CFPB Bulletin 12-01 ("Bulletin") that the submission of privileged information to the CFPB would not, under existing law, result in a waiver of any applicable privilege, and explained that the Bureau was exercising its rulemaking authority to codify this result in order to provide maximum assurances of confidentiality to the entities subject to its supervisory or regulatory authority.
The proposed rule was intended to govern any claim, in Federal or State court, that a person has waived any applicable privilege, including the privilege for attorney work product, by providing such information to the Bureau in the exercise of its supervisory or regulatory processes.
I will provide a sketch of the objections raised by twenty trade associations (with one letter being submitted on behalf of five trade associations), eight individual financial institutions, and two individuals.
The Rule will have the effect of chilling attorney-client communications within supervised entities.
Note: According to the CFPB, the Rule encourages and strengthens communications between supervised entities and their attorneys by providing additional protections for the confidentiality of those communications. The Rule itself does not require the submission of privileged information, but instead merely provides protections for privileged information that is submitted to the CFPB, voluntarily or otherwise.
The Bureau should not adopt the proposed rule, but wait for Congress to address the institutions' concerns regarding privilege waiver through the enactment of legislation.
Some commenters disagreed with the Bureau's position, stated in the notice of proposed rulemaking, that the Bureau has the authority to compel privileged information and that the submission of privileged information to the Bureau pursuant to this authority does not waive any applicable privilege because it is not voluntary; therefore, for this reason, the Rule will not effectively preserve the privileged nature of information submitted to the Bureau.
Commenters expressed concern regarding the Bureau's disclosure to other agencies of attorney-client or work product privileged information submitted to the CFPB in the course of its supervisory process.
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Confidential Treatment of Privileged Information
July 5, 2012
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