Getting Prepared for the CFPB Examination

January 12, 2023 QUESTION Well, it has finally happened, and we have been told that the CFPB is going to be doing an examination of our company. I am in the compliance department, and, needless to say, everyone is getting ready. But there is also anxiety about what to expect. Nobody, including some top management, has ever been through a CFPB audit. Even our legal counsel has never been involved in a CFPB exam.  Our company has never had a CFPB exam before! So, we need help understanding what is going to happen. As part of our preparation, we are retaining your firm to do a CMS Tune-up, which will give us an overview of our Compliance Management System. I asked permission from our Chief Compliance Officer and our CEO to write you for some guidance. We want to know what to expect. Please let us know the usual way that the CFPB conducts its audits.   What is the customary way that we can expect the CFPB to audit us?  Are there resources we can research for CFPB examination guidelines? ANSWER First, everybody take a deep breath! The Consumer Financial Protection Bureau (CFPB) is not your enemy. Consider it like state banking departments, which, like them, is a sort of consumer advocacy agency. The CMS Tune-up is a good overview of your Compliance Management System. However, you should have a solid understanding of the CFPB's examination process itself. I began writing extensively about the CFPB even before it was enfranchised. For instance, in 2009, I published an article entitled The CFPA Controversy: Asking the Tough Questions. Indeed, in 2011, just days before the CFPB received its enumerated authorities, I published a dialogue with Elizabeth Warren, who had advocated for it in the halls of Congress, and in speeches, lectures, and interviews throughout the United States. The article was entitled Opening a Dialogue: Elizabeth Warren and the Mortgage Industry. I invited many mortgage industry organizations and officials to participate in the interview questions. Nearly all major mortgage industry associations responded to my invitation. Senator Warren (then Professor Warren) and her staff worked with me on this project. Send me a request if you want a copy of the foregoing articles. And here's my takeaway: the CFPB's remit is to ensure consumer financial protection. If your company complies with applicable Federal consumer laws, the CFPB will help to ensure your company's regulatory stability.  Getting ready – and staying ready – for a CFPB exam requires you to be aware of the CFPB's focus. There are essentially three supervisory activities in the CFPB's mandate, which are ... FEATURED  COMPLIANCE TUNE-UP QC TUNE-UP MORTGAGE QUALITY CONTROL

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Did You Know? What are the 5 objectives of the CFPB? Request Compliance Solutions (1) Consumers are provided with timely and understandable information to make responsible decisions about financial transactions; (2) Consumers are protected from unfair, deceptive, or abusive acts and practices and from discrimination; (3) Outdated, unnecessary, or unduly burdensome regulations are regularly identified and addressed in order to reduce unwarranted regulatory burdens; (4) Federal consumer financial law is enforced consistently, without regard to the status of a person as a depository institution, in order to promote fair competition; and (5) Markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation.

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