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NAFCU, in a letter to the CFPB Monday, reiterated its steadfast position that credit unions should not be subject to the bureau's enforcement authority and suggested that the bureau change its enforcement approach to focus on bad actors in the marketplace.

NAFCU Regulatory Affairs Counsel Ann Kossachev was writing in response to the CFPB's request for information (RFI) on its enforcement processes. In addition to urging the bureau to exempt credit unions from its enforcement authority, Kossachev detailed four suggestions to improve the CFPB's enforcement processes:

• Further define unfair, deceptive, and abusive acts and practices (UDAAP). Kossachev noted that the Dodd-Frank Act provides broad definitions of prohibited behaviors under UDAAP, and while the CFPB has barely issued any specific guidance on the prohibited practices, the bureau continues to pursue enforcement proceedings under the provision. Kossachev requested that the bureau issue guidance to further clarify "abusive" and "unfair," and also work with the NCUA to resolve questions related to UDAAP-based enforcement actions.

• Make the Notice and Opportunity to Respond and Advise (NORA) process mandatory. "Parties to an action deserve the ability to present their positions to the Bureau before a determination is made on the enforcement action," Kossachev wrote. "Making this process mandatory would substantially increase transparency, protect essential due process interests and avoid the appearance of uninformed, one-sided decision-making."

• Permit entities to make presentations prior to legal proceedings. In addition to allowing parties to submit a written response through the NORA process, Kossachev argued the bureau should also allow them to attend preliminary hearings before a decision is reached on an enforcement action. Doing so "would allow parties to meet face-to-face with Bureau enforcement officials to better understand the allegations against them and lead to a more informed process overall."

• Make press releases less inflammatory, more focused on facts. Kossachev recommended the bureau adopt a more facts-based approach to press releases related to legal proceedings, similar to other federal financial regulators. She said NAFCU and its members have concerns about the current length and language of press releases, which often aim to invoke an emotional response.

The full letter is available here.