The CFPB’s Ombudsman’s Office has issued its fifth annual report covering the Office’s activities during fiscal year 2016 (October 1, 2015 through September 30, 2016). The role of the Ombudsman’s Office is to assist in the resolution of individual and systemic issues that a depository entity, non-depository entity, or consumer has with the CFPB.
The report’s “Demonstrating the Ombudsman in Practice” section provides examples of the Ombudsman’s role in assisting in the resolution of CFPB “process issues.” Noteworthy examples included:
- Engaging in “shuttle diplomacy” to resolve an inquiry received from a company in the midst of an ongoing CFPB examination concerning the company’s ability to share the examination’s existence with its state regulator. (The report notes that CFPB regulations require a company to obtain the CFPB’s permission to share confidential supervisory information.) The Ombudsman also reviewed the process for such requests, specifically how a company would initiate a request to share information and the CFPB’s process for approval of such requests.
In August 2016, the CFPB proposed amendments to its rule on the disclosure of records and information. The proposal included a provision that would prohibit the recipient of a civil investigative demand (CID) or letter from the CFPB providing notice and opportunity to respond and advise (NORA) from disclosing the CID or NORA to third parties without prior consent of a high ranking CFPB official. In a blog post for the Washington Legal Foundation, Ballard Spahr attorneys Burt M. Rublin and Daniel L. Delnero explain why the proposal is not only ill-advised as a matter of public policy but is also unconstitutional both as a prior restraint on speech and a content-based restriction. Although there is clearly a distinction between disclosing an enforcement investigation and disclosing a supervisory examination (with the CFPB having a stronger case for secrecy as to the latter), the matter described by the Ombudsman appeared to deal with a state agency that had clear jurisdiction over the entity the CFPB was examining. At the same time it is attempting to keep its examinees on a tight leash with respect to disclosures of this sort, the CFPB, in the proposed amendents to its rule on the disclosure of records and information, is also seeking to expand its discretion to share confidential supervisory information with state attorneys general and other agencies that do not have supervisory authority over companies.
- Sharing with the CFPB a company’s comment that the CFPB Daily Digest (a digital publication that companies can elect to receive that contains notifications on consumer complaints) did not show that the company had complaints requiring a response. Consumer Response advised the Ombudsman that the Daily Digest is provided as a service and companies should log into the Company Portal to monitor complaints rather than rely only on the Daily Digest.
- Sharing with the Office of Enforcement feedback and suggestions regarding a pilot enforcement warning letter project being developed by the CFPB.
The report includes a summary of feedback and recommendations the Ombudsman received from consumer-focused organizations that participated in a June 2016 forum on various topics that included the consumer complaint process and database. Among the comments received was that the database is not “mobile friendly” and that the CFPB should add the actual company name provided by consumers rather than the parent company name.
In the section of the report dealing with the Ombudsman’s review of systemic issues, the Ombudsman discusses the two systemic issues it reviewed in FY 2016 and updates two issues raised in previous reviews. The systemic issues reviewed in FY 2016 were the following:
- In response to comments about the CFPB’s documentation of ex parte communications, the Ombudsman reviewed ex parte communications regarding rulemakings posted by the CFPB on regulations.gov. (The Ombudsman notes that the CFPB’s ex parte policy is set forth in Bulletin 11-3.) In reviewing such documentation, the Ombudsman found that no consistent format was used even though a template is available to CFPB staff. The Ombudsman also found that there was no consistency in the timing of when documents were posted after a communication and found examples of communications posted as ex parte communications although not required by CFPB policy. The Ombudsman has recommended that the CFPB standardize its process for memorializing ex parte communications regarding proposed rules and understands that the CFPB plans to issue a revised ex parte policy.
- In response to comments about the specificity of options available to consumers to identify the issue with a company when submitting complaints, the Ombudsman provided feedback to Consumer Response regarding the need for additional sub-issues for some products and shared concerns about the varying number and specificity of issue/sub-issue categorization options provided to consumers depending on the product involved in the complaint. The Ombudsman understands that, in the next iteration of the consumer complaint form, Consumer Response plans to add issues and sub-issues, as relevant, for all products other than mortgages. Consumer Response plans to further consider the impact of additional options for mortgages.
The issues reviewed in prior reports for which the Ombudsman provided updates were the following:
- In response to feedback provided by the Ombudsman that the CFPB does not provide sufficient lead time when announcing public events such as field hearings, the CFPB indicated that it “generally follows the accepted federal agency best practice of a 14-day advance notice for field hearings and public events” and that “various logistical issues, including city selection and the time required to procure event space, present challenges to providing lead time greater than the 14 day window.”
- In response to industry concerns about the consumer complaint process, the Ombudsman provided recommendations to the CFPB on various issues such as when a company should be able to treat multiple consumer complaints involving the same company, transaction, and issue as duplicate complaints and the need for clarification regarding the distinction between administrative and substantive complaint responses and how the selection of a response determines if a complaint is published. The Ombudsman states that these recommendations were implemented in the updated Company Portal Manual issued by Consumer Response in March 2016.
In the report, the Ombudsman discusses plans to pilot a new initiative, “Ombudsman Interactives,” which will consist of facilitated discussion sessions held onsite for attendees at consumer, trade and other groups’ conferences. These sessions would be available by request on a first-come first-served basis, subject to the Ombudsman’s budget and availability.