No-Action Letter

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On May 25, 2022, my colleagues, Mike Gordon, John Culhane and Ron Vaske published a blog which reported on a press release issued by the CFPB on the prior day entitled “CFPB Launches New Effort to Promote Competition and Innovation in Consumer Finance.”  The blog stated:

In its press release, the CFPB states that “[a]fter a review of these programs [the No Action Letter (NAL) and Compliance Assistance Sandbox (CAS) programs], the agency concludes that the initiatives proved to be ineffective and that some firms participating in these programs made public statements indicating that the Bureau had conferred benefits upon them that the Bureau expressly did not.”

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The CFPB recently issued a new no-action letter (NAL) to Upstart Network, Inc. regarding its automated model for making underwriting and pricing decisions on applications by consumers for unsecured, closed-end loans.  Upstart uses artificial intelligence techniques and alternative data in its model.

The new NAL is essentially a renewal of the NAL issued to Upstart in September 2017, which was the first NAL issued by the CFPB. … Continue Reading

Last week, the CFPB finalized its proposed revisions to its trial disclosures and no-action letter policies and also finalized its proposal to create a new FinTech sandbox policy.  It also announced the creation of the American Financial Innovation Network (ACFIN), a network of federal and state regulators to facilitate innovation, and issued its first no-action letter under the final revised policy.… Continue Reading

In its first No-Action Letter under the new revised policy, the CFPB addresses a long-standing issue under the Real Estate Settlement Procedures Act regarding certain payment arrangements between mortgage lenders and housing counseling agencies.  We previously reported on the CFPB issuing its final No-Action Letter policy and other innovation policies.  (The CFPB issued just one No-Action Letter under its policy prior to its revision.)… Continue Reading

On September 14, 2017, the CFPB issued a no-action letter – the first one ever issued by the agency – to a marketplace lender, stating that the agency had no present intention to take enforcement or supervisory action against the lender under the Equal Credit Opportunity Act (ECOA) relating to the lender’s underwriting model, and especially its use of certain alternative data fields. … Continue Reading

Ballard Spahr to conduct webinar on March 24, 2016 entitled “CFPB Regulatory Certainty or Uncertainty? Consent Orders, Informal Guidance, and the New No-Action Letter Policy” Register here

The CFPB has issued a final policy statement on issuing “no-action” letters (NAL) for innovative financial products or services.  The CFPB’s statement that the final policy was released on its website on February 18, 2016 presumably means that the final policy became effective immediately.… Continue Reading

The American Bankers Association, American Bankers Insurance Association and Consumers Banking Association have submitted a joint comment letter on the CFPB’s proposed policy on issuing “no-action” letters for innovative financial products or services.

The trade groups expressed the overall concern that the proposal will not “serve as a viable approach to alleviating regulatory uncertainty” because it is “limited in its applicability and yet fraught with perils for the requester.” … Continue Reading

The CFPB published for comment in today’s Federal Register a proposed policy on issuing “no-action” letters for innovative financial products or services.  Like those issued by the SEC and CFTC, the no-action letters would communicate that, subject to specific facts and circumstances, CFPB staff has no present intention to recommend initiation of an enforcement or supervisory action against the requester with respect to a specified matter. … Continue Reading