The Consumer Financial Protection Bureau has issued a rule governing the administration of its new Civil Penalty Fund, created to compensate victims of a person or company that was fined in an enforcement action.
The fund, established by the Dodd-Frank Act, will draw from civil penalties collected by the CFPB from violations of federal consumer financial protection laws. The amount of compensation provided to victims will depend on the circumstances of each case and how much, if any, was received from other sources.
While the Civil Penalty Fund Rule was issued as a final rule and effective immediately, the Bureau has also published a Notice of Proposed Rulemaking and will consider public comments until July 8. This feedback may result in a revised rule.
The rule establishes a two-stage process for disbursements from the fund. At the allocation stage, a fund administrator will assign compensation thresholds to classes of victims who suffered from the same, or similar, violations. Funds will be distributed to eligible victims every six months and allocation schedules will be posted on consumerfinance.gov. The first allocations are expected by May 30, 2013. The bring the program up to date, it will cover July 21, 2011 through March 31, 2013, with a second allocation period that begins April 1, 2013 and ends on Sept. 30, 2013. Subsequent periods will be six-months in duration and begin immediately after the end date of the preceding period.
The length of time it takes to distribute payments will vary depending on the circumstances of each case. If money remains in the fund after all identified victims are paid, the CFPB is authorized to set aside money for consumer education and financial literacy programs. The Bureau plans to use the federal procurement process for those programs. It will update fund activity in its Semi-Annual Reports to Congress and quarterly budget reports.