The CFPB Ombudsman’s Office recently released its FY2020 annual report. The Ombudsman’s Office is intended to serve as an independent, impartial, and confidential resource that assists consumers, financial entities, consumer or trade groups, and others in informally resolving process issues with the CFPB.
In the annual report, the Ombudsman provides examples of the Office’s work in FY2020 and discusses the types of internal and external engagement in which the Office has participated during that period. The report includes a discussion of a new beta test that the Ombudsman’s Office conducted for a post-examination survey of companies supervised by the CFPB. In a blog post about the report, the Ombudsman stated that following completion of the report, the Office concluded its beta test evaluation and determined that the Office will conduct a post-examination survey of supervised entities as a new initiative going forward.
In addition to individual inquiries, the Ombudsman reviews systemic issues that may affect consumers or financial entities nationwide, in a particular region, or with a certain process. In FY2020, the Ombudsman reviewed the following two issues as systemic issues:
- Small business lending discrimination complaints. In April 2020, the CFPB published a blog post informing small business owners who believe they were discriminated against based on race, sex, or another protected category that they could submit a lending discrimination complaint online to the CFPB. Based on research it conducted, the Ombudsman determined that there was an opportunity for the CFPB to set expectations and further clarify its processes for receipt and analysis of small business complaints on various topics. The Ombudsman indicates that the CFPB is exploring options to set clear expectations for small businesses.
- Information the CFPB provides during and at the conclusion of exams. The Ombudsman identified the following factors that arise either from the supervision process or from the relationship between the enforcement process and the supervision process as contributing to a company perceiving that examination results are less favorable than what it anticipated:
- The examination team and SEFL at CFPB headquarters differ on final examination determinations and on a result that differs from what the company understood during the soft close.
- There is extended timing between the end of an examination and the company’s receipt of examination results and companies may not be aware of the extended timing or potential outcomes.
- The phrasing and terminology in written communications may not be fully understood by the company.
Other factors contributing to this perception identified by the Ombudsman arise from the intersection of the supervision and enforcement processes. The Ombudsman noted that there is limited information in plain language about the enforcement process for companies and limited information about the transition from the supervision process to the enforcement process. It observed that it is not within examiners’ purview to discuss the enforcement h they can refer companies regarding the enforcement process that may be easily understood. The final steps of an examination, such as examination results or use of the appeals process, may be less clear to a company when the CFPB starts enforcement activity before the examination’s conclusion. The Ombudsman concluded that overall some companies do not have clarity about the impact on their examinations once the Office of Enforcement becomes involved. The Ombudsman has recommended that the CFPB make available to examiners and companies additional information on the enforcement process that includes how supervision intersects with enforcement.
The report also includes updates on previous systemic reviews involving how non-consumers contact the CFPB by phone and consumer complaints referred to the CFPB by other agencies.