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GUIDE Act targets CFPB’s rulemaking transparency

Joe Mont | April 25, 2018

Yet another legislative redress for concerns about the Consumer Financial Protection Bureau is now making its way through the House of Representatives.

The Give Useful Information to Define Effective Compliance Act (or, for short, GUIDE Act), seeks to “bring predictability and transparency” to CFPB’s process of promulgating rules and guidance.

The bipartisan bill is sponsored by Rep. Sean Duffy (R-Wisc.), chairman of the Financial Services Subcommittee on Housing and Insurance, and Rep. Ed Perlmutter (D-Colo.).

Specifically, the GUIDE Act:

  • Mandates that the CFPB’s director issue “guidance” that is necessary or appropriate to carry out the purpose of the laws it is responsible for, including facilitating compliance;
  • Defines “guidance” to include a range of written issuances from interpretative and legislative rules, to bulletins, and frequently asked questions;
  • Requires the Bureau to publish in the Federal Register, within one year of enactment, the definitions, criteria, timelines, and process for issuing Bureau guidance (final rules would have an 18-month requirement to do the same);
  • Prohibits liability for reliance in good faith on guidance from the Bureau or any predecessor agency that was in effect at the time of such act or omission;
  • Requires the Bureau to establish a process and timeframes for requests for guidance, including time limits to provide answers in response to requests for guidance;
  • Requires the Bureau to create a process for amending or revoking guidance, including a process for public notice and comment; and
  • Requires the Bureau to develop guidelines for determining the size of any civil money penalties and publish these guidelines in the Federal Register within 18 months of enactment.

“The CFPB has historically ignored requests for guidance and clarification from American businesses, consumers, and Congress, especially in relation to the Know Before You Owe rule,” Duffy said. “The CFPB should focus on its mission to actually protect consumers rather than play ‘gotcha’ with ambiguous and surprising guidance for mortgage lenders.”

The CFPB’s Know Before You Owe mortgage disclosure rule took effect in October 2015 and was amended last summer.

The rule and its amendments introduced new forms and methodologies that banks and mortgage servicers must use when ensuring that loans are within the finances of borrowers.