CFPB Declares Updates to Exam Manual Based on Expansive Interpretation of UDAAP Are Inoperative

Following a recent decision from the district court in the Eastern District of Texas, the CFPB has recently announced that updates to its Supervision and Examination Manual based on its expansive interpretation of “unfair, deceptive and abusive acts and practices” (UDAAP) are no longer operative.

In March 2022, the CFPB had announced that it had expanded its interpretation of UDAAP to include discriminatory practices and had published an updated exam manual based on this interpretation.  Earlier this month, the district court ruled that the agency had exceeded its statutory authority under the Dodd-Frank Act, finding, in part, that Congress had not conferred upon the agency such sweeping authority to regulate the financial-services industry for discrimination.  The court vacated those updates and enjoined the agency from conducting any examination, supervision, or enforcement action based on those updates against any member of the trade associations who had brought the action.  As a result of this decision, the CFPB has announced that the updates to the exam manual are no longer operative.

WBK’s previous coverage of the CFPB’s announcement and updated manual is here, and its coverage of the district court’s ruling is here.