CFPB Finalizes Policy on No-Action Letters

The CFPB recently issued its final policy regarding no-action letters. Under the policy, the CFPB may, in its discretion, issue a no-action letter (or “NAL”) to specific applicants in certain specific circumstances. In particular, a NAL could be issued only if the matter involves innovative financial products or services that promise substantial consumer benefit, and only if there is substantial uncertainty as to whether or how provisions of statutes implemented or regulations issued by the CFPB would be applied. If issued, a NAL would advise the recipient that the CFPB has no present intention to recommend initiation of an enforcement or supervisory action against the requester with respect to a specified matter, subject to stated limitations.

Importantly, the CFPB’s policy states that NALs would be nonbinding on the CFPB and would not bind courts or other actors (such as other regulators or parties in litigation) who might challenge a NAL recipient’s product or service. Nevertheless, the CFPB believes that this new policy may offer significant opportunities to facilitate innovation, access to credit, and otherwise substantially enhance consumer benefits.

Under the policy, a NAL is subject to subsequent revocation or modification in the discretion of the CFPB. In addition, the CFPB stated that denials of a request for a NAL generally would not be published. However, the CFPB also stated that circumstance may arise where publication of a denial would be in the public interest, and the policy therefore does not categorically rule out publication of denials.

A copy of the final Policy on No-Action Letters is available at: http://files.consumerfinance.gov/f/201602_cfpb_no-action-letter-policy.pdf.