Compliance Blog

Welcome to the shortest day of 2020! Today marks the winter solstice and the beginning of a new season. And speaking of the start of something new, let’s take a quick look at the CFPB’s new advisory opinion program.

Earlier this month, the CFPB published its advisory opinions (AO) policy. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the CFPB is required to issue guidance implementing federal consumer financial law. Providing clear and useful guidance to credit unions and the entire financial services industry is a large part of the CFPB’s role. NAFCU has shown support for an AO program and asked for the opinions to be made publicly available to ensure they are easily accessible.

In its June announcement, the CFPB explained that the program allows credit unions and other financial institutions to submit requests for additional clarity on regulations. The bureau will provide public responses to requests on certain topics that meet the program's priorities, which include:

• providing consumers with timely and understandable information to make responsible decisions;
• identifying outdated, unnecessary or unduly burdensome regulations in order to reduce regulatory burdens;
• providing consistency in enforcement of Federal consumer financial law in order to promote fair competition; and
• ensuring markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation.

In its final policy, the CFPB stated that requests for AO’s should include the following:

• confidential information – the request should identify any information that should be considered confidential, but should not contain sensitive information like account numbers or Social Security numbers;
• identity of person or entity seeking advisory opinion – however, a third party, such as a trade association, may submit a request on behalf of an entity or group of entities and each entity need not be identified;
• statement about the absence of investigation or litigation – the request should identify whether the issue at hand is the subject of litigation or federal or state agency investigation;
• specifics about the issue on which the advisory opinion is sought – the request must outline the actual facts and circumstances of a real situation and the regulatory provision at issue. Requests should also offer a proposed interpretation of how the regulation might apply to the facts at hand.

In addition to finalizing and publishing the policy, the CFPB announced two approved AOs that are now publicly available on the bureau's website and published in the Federal Register.

The CFPB issued one AO regarding the applicability of Regulation Z to certain earned wage access (EWA) programs. The other opinion touches on a topic we regularly receive questions about, private education loans. In the AO, the CFPB explains, “loan products that refinance or consolidate a consumer’s pre-existing Federal, or Federal and private, education loans meet the definition of ‘private education loan’ in the Truth in Lending Act and Regulation Z and are subject to the disclosure and consumer protection requirements in subpart F of Regulation Z.” This AO reflects an official interpretation from the bureau, which credit unions and other financial institutions will be expected to comply with.

If your credit union would like an opinion on an ambiguous regulation, requests may be submitted via email to advisoryopinion@cfpb.gov.

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CFPB Issues Final Rule on Consumer Disclosures Related to Debt Collection

The CFPB released the anticipated second part of the final debt collection rule. The final rule addresses information that a debt collector must provide to a consumer at the outset of debt collection communications and provides a model validation notice. It also addresses consumer protection concerns related to passive collection activities, such as furnishing credit information, and the handling of time-barred debt. This rule is effective on November 30, 2021.