On Oct. 13, the Consumer Financial Protection Bureau released its first Supervision and Examination Manual, the guide that CFPB examiners will use in exams with 111 banks, thrifts and credit unions with total assets over $10 billion.
“The CFPB will examine the largest of the large banks on a continuing basis. We will examine other banks periodically. When we are ready, our examiners will also use this manual as a tool to look at other providers of consumer financial products and services that are not depository institutions, such as mortgage lenders, payday lenders, and private education lenders,” according to Peggy Twohig and Steve Antonakes on the CFPB blog. Twohig oversees non-bank supervision, and Antonakes is in charge of large bank supervision.
Bankers should also review Part III of the Manual, which provides a thorough risk assessment template useful to banks of all sizes. The 22-page document takes banks through the steps of evaluating inherent “risks to consumers” of a particular business line or of the business entity as a whole, as well as the “quality of controls implemented by the entity to manage and mitigate those risks.”
The CFPB’s Risk Assessment template provides prompts to help uncover bank products and practices that may potentially deemed unfair, deceptive or abusive, an area in which all regulators are putting increasing focus.
Each state has its own unique law related to UDAAP, and the CFPB is authorized to write and implement rules related to UDAAP that could impact community banks. According to the law firm K&L Gates LLP, the CFPB is likely to exercise its UDAAP rulemaking authority in these areas:
- Mortgage loan products and pricing
- Credit card pricing and programs
- Debit card programs
- Overdraft protection programs
- Information reporting and sharing
The Bureau can also exercise its authority on a case-by-case basis through enforcement actions, the law firm noted.
Feedback on the manual is invited; comments can be submitted to CFPB_Supervision@cfpb.gov.