On October 10, 2014, the CFPB issued a proposal that would empower CFPB staff to issue
no-action letters (NALs) for “innovative financial products or services that substantially benefit consumers where there is substantial uncertainty whether or how specific provisions of statutes or regulations implemented by the Bureau would be applied.” While the proposed policy could benefit the industry—particularly given the pace of innovation in consumer financial products and services—the precedential value of the CFPB’s NALs appears limited, the evaluation criteria are highly subjective, and the process for requesting a NAL would impose significant burden on requestors.
Consistent with other federal agency NAL policies, the CFPB NAL would be limited to the requestor and would have no precedential value for the broader marketplace. Moreover, under the proposed policy, the CFPB would retain the right to condition the NAL, revoke the NAL at any time, and initiate enforcement or supervisory investigations regarding compliance with the terms of the NAL. The proposal also states that NALs would be non-binding “on courts or other actors who might challenge a NAL-recipient’s product or service, such as other regulators or parties in litigation.”
The seemingly circumscribed benefit would come with a significant burden for the requestor. Beyond the detailed plans and explanation of consumer benefits and risks that would be required in each submission, the requestor’s submission would be subjected to the CFPB’s rules regarding the disclosure of information, which means the proposal could be subject to public disclosure, unless there is an applicable FOIA exemption or exclusion.
For additional information, see our alert on this proposal.