Newsroom

NAFCU Director of Regulatory Affairs Alexander Monterrubio yesterday offered recommendations for the CFPB to improve the bureau's civil investigative demands (CIDs) processes by ensuring the demands are "clear in their purpose and limited in their scope."

Monterrubio sent the recommendations in a letter in response to a request for information (RFI) issued by the bureau in January. Based on NAFCU's analysis and feedback from member credit unions, Monterrubio details potential improvements in three categories of the CID process:

• Specific Information on Purpose and Scope: Monterrubio notes that contrary to principles for regulating the U.S. financial system, the CFPB has in the past used CIDs "as a means to request materials in an ambiguous manner" by issuing broad statements of purpose for its investigations. NAFCU recommends the bureau amend its CIDs procedures to ensure specific details of the acts and practices under investigation are included, and include the specific scope of materials the financial institution under investigation should turn over to the bureau along with an explanation of how the materials are related to allegations and the investigation.
• Appeals and Modifications of CIDs: Under current processes, Monterrubio says that institutions have a limited timeframe to request to modify a CID and confidentiality is not guaranteed if a CID is petitioned, representing a reputational threat. NAFCU recommends the bureau work to protect confidentiality so institutions can challenge potentially erroneous or unlawful premises of a CID and also allow petitions to be filed at any point during an investigation to ensure a fair process.
• Bolster Meet-and-Confer Processes: "[T]he CID process is an invasive and burdensome action on the part of the federal government. It should be used thoughtfully and deliberate manner," Monterrubio writes. NAFCU recommends meet-and-confer policies are amended to ensure productive, mutually beneficial discussions between the CFPB and institutions regarding CID modifications.

CIDs are issued by the CFPB when the bureau suspects a financial institution is violating consumer protection laws. Through the RFI, the CFPB sought information on how its processes related to CIDs can be updated, streamlined or revised so the bureau can better meet its statutory and regulatory objectives, while also minimizing existing burdens.

NAFCU will monitor the CFPB's efforts on these processes.