At the end of last week, the CFPB announced that it was taking three steps consisting of implementing an advisory opinion program, updating its responsible business conduct bulletin, and proposing an award program for whistleblowers.

Advisory program.  Despite objections from Democratic Senators, the Bureau announced that it is implementing an advisory opinion program that will allow companies to submit requests for an advisory opinion to the Bureau via its website.  The Bureau will be issuing procedures for how requests will be addressed, including how the Bureau will prioritize requests.  Advisory opinions issued by the Bureau will be published in the Federal Register and on the Bureau’s website.  Such opinions will include interpretations of the Bureau’s existing rules.  The Bureau will also continue to provide responses to individual regulatory inquiries.

Responsible business conduct bulletinBulletin 2020-01 updates the Bureau’s responsible business conduct bulletin issued in June 2013 (Bulletin 2013-06).  Like the 2013 bulletin, the updated bulletin identifies four categories of “responsible conduct”: self-assessing (referred to in the 2013 bulletin as “self-policing”), self-reporting, remediating, and cooperating.  While the 2013 bulletin focused on the Bureau’s consideration of these categories in enforcement actions, the updated bulletin discusses the Bureau’s use of these factors “when evaluating whether some form of credit is warranted in an enforcement investigation or supervisory matter.”  As examples of how the Bureau might give “credit” to a company, the Bureau indicates that it might close an enforcement investigation with no action or decide not to include Matters Requiring Attention in an exam report or supervisory letter.  If also indicates that even if it does take action, responsible conduct could result in other credit.  For an entity supervised by the Bureau, it might resolve violations non-publicly through the supervision process.  Responsible conduct could also result in a reduction in the number of violations pursued by the Bureau or a reduction in the sanctions or penalties sought by the Bureau in an enforcement action.

Other differences between the 2013 bulletin and the updated bulletin include:

  • Self-assessing. In the updated bulletin, the questions the Bureau will consider regarding self-assessing no longer include whether the violation was significant to the entity’s profitability or business model.
  • Self-reporting.  The Bureau notes in the updated bulletin that “an entity’s self-reporting of a potential issue does not require it to concede that it has violated the law.”
  • Cooperating. The Bureau notes in the updated bulletin that it “does not consider an entity’s good faith assertion of privilege in an enforcement investigation to be a lack of cooperation: an entity asserting privileges in good faith remains eligible for potential favorable consideration for cooperating.”

Whistleblower legislative language.  The Bureau has proposed legislative language to amend Title X of the Dodd-Frank Act to establish a whistleblower award program for individuals who report “original information relating to a violation of Federal consumer financial law.”  Existing Dodd-Frank Section 1057 protects whistleblowers who report alleged violations of the Consumer Financial Protection Act, any law subject to the jurisdiction of the CFPB, or any CFPB rule, from retaliation by their employers.  These protections apply if the employee reports the alleged violations to the employer, the CFPB, or any other federal, state, or local government authority or law enforcement agency.  The proposed amendment would create whistleblower incentives in the form of monetary awards.  Such awards would be based on a percentage of the amount of monetary sanctions collected in a “successful” administrative proceeding or court action brought by Bureau, including any settlement.  The proposed amendment also includes confidentiality protections for whistleblowers.

The concept of incentivizing whistleblowers is not new to the Dodd-Frank Act.  As originally enacted, the Act contained provisions to reward whistleblowers who provide information to the Securities and Exchange Commission regarding securities violations or bribes paid to foreign officials in violation of the Foreign Corrupt Practices Act and whistleblowers who provide information to the Commodities Futures Trading Commission regarding violations in the trading of commodities and on the currencies exchanges.