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Consumer Protection Bureau Releases Examiners Handbook

Reese Darragh | October 14, 2011

The Consumer Financial Protection Bureau published its examiners' handbook on its Website on Oct. 13 to show financial companies the processes and procedures involved during an investigation by the bureau's employees.

The manual provides detailed information on how examiners determine if consumer financial products and services providers are complying with consumer protection laws and methods and how the examiners determine if adequate policies and procedures are in place for compliance purposes. By establishing the up-front expectations, the agency said it is hoping to foster a constructive relationship with companies under its supervision.

“The CFPB is making the general exam manual and servicing procedures public so that financial service providers know what to expect during their examinations, and so that the public knows how we are fulfilling our responsibilities,” said the CFPB in a press release.  Letters have been sent out to the banks, thrifts, and credit unions to inform them of the manual release.

The CFPB said it has incorporated examination procedures called for in the Truth in Lending Act, Real Estate Settlement Procedures Act, the Fair Credit Reporting Act, and nine other regulations. All these standards have long been practiced by other federal regulators. The manual will help to ensure that the bureau is applying the law consistently across all companies under its supervision.

On its agenda, the CFPB said it will focus on sales and marketing materials as well as disclosures given to customers by financial companies to solicit business. “We will review whether required information is presented in a clear and conspicuous manner consistent with applicable law,” it said.

The manual is separated into three parts. The first describes the supervision and examination process, the second contains the procedures for determining compliance with specific regulations, and the last part contains templates of the examination reports showing information from the supervised entities and the examination process.

In addition to the handbook, the bureau also released its examination procedures for mortgage servicing companies. The examination procedures contain a series of modules, including routine servicing of mortgages, default servicing, and home foreclosure.

Initial examinations will be carried out on more than 100 large institutions with total assets of more than $10 billion. The bureau said while smaller banks will be examined on an ad-hoc basis, larger banks will be supervised continuously with the standard as described in the manual.

“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,” it said.

The agency welcomes comments on the handbook from industry representatives and the public.