Having announced earlier this year that it was implementing an advisory opinion (AO) program, the CFPB published a procedural rule in today’s Federal Register establishing a pilot AO program.  It also published a proposed procedural rule in today’s Federal Register that would establish an AO program to replace the pilot program.

Pilot AO Program. The pilot program, which went into effect today with the publication of the Bureau’s procedural rule in the Federal Register, allows stakeholders to request interpretive guidance “to resolve regulatory uncertainty,” which encompasses “uncertainty with respect to regulatory or, where applicable, statutory provisions.”  The program has the following key features:

  • Requests for AOs can only be made by covered persons or service providers subject to the Bureau’s supervisory or enforcement authority and the requestor must be identified in the request.  Requests will not be accepted from third parties, such as trade associations or law firms, on behalf of unnamed entities.  Requests can be submitted to the Bureau via email or through other means it designates.
  • AOs will be interpretive rules under the Administrative Procedure Act.
  • The Bureau will use the following factors in deciding whether to address an issue through an AO:
    • The issue has been noted in Bureau exams as one that might benefit from additional regulatory clarity
    • The issue is one of substantive importance or impact or one whose clarification would provide significant benefit
    • The issue concerns an ambiguity that the Bureau has not previously addressed through an interpretive rule or other authoritative source
  • The following factors will weigh strongly for a presumption that an AO is not appropriate:
    • The issue is the subject of an ongoing Bureau investigation or enforcement action or the subject of an ongoing or planned rulemaking
    • The issue is better suited for the notice-and-comment process (such as where an AO would change a regulation)
    • The issue could be addressed effectively through a Compliance Aid
    • Clear Bureau or court precedent on the issue is already publicly available
  • Where a statute or regulation establishes a general standard “that can only be applied through highly fact-intensive analysis,” the Bureau does not intend to replace it “with a bright-line standard that eliminates all of the required analysis.”  The Bureau indicates that such general standards, with the Dodd-Frank UDAAP prohibition as an example, “pose particular challenges for issuing advisory opinions, although there may be times when the Bureau is able to offer advisory opinions that provide additional clarity on the meaning of such standards.”

Proposed AO Program. The proposed AO program’s key features generally track those of the pilot program.  However, unlike the pilot program, requestors of AOs would not be limited to covered persons or service providers subject to the Bureau’s supervisory or enforcement authority and outside counsel or a trade association could submit a request for an AO on behalf of one or more clients or members without identifying them.  The issues on which the Bureau seeks comment include how the Bureau should prioritize requests for AOs.  Comments must be filed by August 21, 2020.

Since the Dodd-Frank Act transferred rulemaking authority for various federal consumer financial protection laws such as TILA and ECOA from the Federal Reserve to the CFPB, the CFPB has not followed the Fed’s practice of regularly updating the Official Staff Commentaries to the implementing regulations.  Because the AOs are to be treated as interpretive rules, it appears that compliance with AOs should provide the same level of protection as compliance with the Official Staff Commentaries.