Responsible Business Conduct: Self-Assessing, Self-Reporting, Remediating, and Cooperating (CFPB BULLETIN 2020-01)

Published date20 March 2020
Citation85 FR 15917
Record Number2020-05505
SectionRules and Regulations
CourtConsumer Financial Protection Bureau
15917
Federal Register / Vol. 85, No. 55 / Friday, March 20, 2020 / Rules and Regulations
1
Other factors the Bureau considers in
determining how to resolve violations of Federal
consumer financial law include, without limitation,
(1) the nature, extent, and severity of the violations
identified and any associated consumer harm; (2)
an entity’s demonstrated effectiveness and
willingness to address the violations; and (3) the
importance of deterrence, considering the
significance and pervasiveness of the potential
consumer harm.
part 365 of the FDIC’s Real Estate
Lending Standards regulation to that of
the other Federal banking agencies.
List of Subjects in 12 CFR Part 365
Banks, Banking, Mortgages.
For the reasons stated in the
preamble, the FDIC corrects 12 CFR part
365 by making the following correcting
amendment:
PART 365—REAL ESTATE LENDING
STANDARDS
1. The authority citation for part 365
is revised to read as follows:
Authority: 12 U.S.C. 1828(o) and 5101 et
seq.
2. Amend appendix A to subpart A of
part 365 by revising footnote 4 to read
as follows:
Appendix A to Subpart A of Part 365—
Interagency Guidelines for Real Estate
Lending Policies
* * * * *
4
For state non-member banks and state
savings associations, ‘‘total capital’’ refers to
that term described in § 324.2 of this chapter.
* * * * *
Federal Deposit Insurance Corporation.
Dated in Washington, DC, on March 12,
2020.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2020–05441 Filed 3–19–20; 8:45 am]
BILLING CODE 6714–01–P
BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Chapter X
Responsible Business Conduct: Self-
Assessing, Self-Reporting,
Remediating, and Cooperating (CFPB
BULLETIN 2020–01)
AGENCY
: Bureau of Consumer Financial
Protection.
ACTION
: Bulletin.
SUMMARY
: In 2013, the Bureau of
Consumer Financial Protection (Bureau)
issued a Bulletin that identified several
activities that businesses could engage
in that could prevent and minimize
harm to consumers, referring to these
activities as ‘‘responsible conduct.’’ The
Bureau is issuing this updated Bulletin
to clarify its approach to responsible
conduct and to reiterate the importance
of such conduct.
DATES
: This Bulletin is applicable on
March 20, 2020.
FOR FURTHER INFORMATION CONTACT
:
Colin Reardon, Division of Supervision,
Enforcement, and Fair Lending, at (202)
435–9668. If you require this document
in an alternative electronic format,
please contact CFPB_Accessibility@
cfpb.gov.
SUPPLEMENTARY INFORMATION
: In
executing its statutory responsibilities,
the Bureau places primary emphasis on
preventing harm to consumers.
Preventing harm to consumers is among
the most effective and efficient ways of
ensuring consumer access to a fair,
transparent, and competitive financial
market. In 2013, the Bureau issued a
Bulletin that identified several activities
that individuals or businesses,
collectively ‘‘entities,’’ could engage in
that could prevent and minimize harm
to consumers, referring to these
activities as ‘‘responsible conduct.’’ The
Bureau is issuing this updated Bulletin
to clarify its approach to responsible
conduct and to reiterate the importance
of such conduct.
In the first instance, the Bureau’s
focus is on building a culture of
compliance among entities, including
covered persons and service providers,
in order to minimize the likelihood of
a violation of Federal consumer
financial law, and thereby prevent harm
to consumers. When a violation of law
does occur, swift and effective actions
taken by an entity to address the
violation can minimize resulting harm
to consumers. Specifically, an entity
may self-assess its compliance with
Federal consumer financial law, self-
report to the Bureau when it identifies
likely violations, remediate the harm
resulting from these likely violations,
and cooperate above and beyond what
is required by law with any Bureau
review or investigation.
Such activities are in the public
interest. Depending on its form and
substance, responsible conduct can
improve the Bureau’s ability to
promptly detect violations of Federal
consumer financial law, increase the
effectiveness and efficiency of its
supervisory and enforcement work,
enable the Bureau to focus its finite
resources on their best use for the
mission, and help more consumers in
more matters promptly receive financial
redress and additional meaningful
remedies for any harm they
experienced.
Because responsible conduct is in the
public interest, the Bureau seeks to
encourage it. Accordingly, if an entity
meaningfully engages in responsible
conduct, the Bureau intends to
favorably consider such conduct, along
with other relevant factors, in
addressing violations of Federal
consumer financial law in supervisory
and enforcement matters.
1
Depending
on the nature and extent of an entity’s
actions, the Bureau has a wide range of
options available to properly account for
responsible conduct. For example, in
light of an entity’s responsible conduct,
the Bureau could exercise its discretion
to close an enforcement investigation
with no action or decide not to include
Matters Requiring Attention in an exam
report or supervisory letter. Even if the
Bureau does take action, those who
engage in responsible conduct may
receive other types of credit for engaging
in such behavior. For entities within the
Bureau’s supervisory authority, the
Bureau’s Division of Supervision,
Enforcement, and Fair Lending makes
determinations of whether violations
should be resolved through non-public
supervisory action or a possible public
enforcement action through its Action
Review Committee (ARC) process. The
ARC process includes factors that are
closely aligned with the elements of
responsible conduct. Thus, for entities
under the Bureau’s supervisory
authority, responsible conduct could
result in resolving violations non-
publicly through the supervisory
process. Responsible conduct also could
result in the Bureau’s reducing the
number of violations pursued or
reducing the sanctions or penalties
sought by the Bureau in any public
enforcement action. The Bureau intends
to consider the extent and significance
of an entity’s responsible conduct, with
more extensive and important
responsible conduct leading to more
substantial consideration.
This guidance, and its description of
factors that may warrant favorable
consideration, is not adopting any rule
or formula to be applied in all matters.
The importance of each factor in a given
matter, and the way in which the
Bureau evaluates each factor, will
depend on the circumstances. The
Bureau is not in any way limiting its
discretion and responsibility to evaluate
each matter individually on its own
facts and circumstances. In short, the
fact that an entity may argue it has
satisfied some or even all of the factors
set forth in this guidance will not
necessarily foreclose the Bureau from
bringing any enforcement action or
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Federal Register / Vol. 85, No. 55 / Friday, March 20, 2020 / Rules and Regulations
seeking any remedy if it believes such
a course is necessary and appropriate.
Factors Used To Evaluate and
Acknowledge Responsible Conduct
As noted previously, the Bureau
principally considers four categories of
conduct when evaluating whether some
form of credit is warranted in an
enforcement investigation or
supervisory matter: Self-assessing, self-
reporting, remediating, and cooperating.
However, if an entity engages in another
type of activity particular to its situation
that is both substantial and meaningful,
the Bureau may take that activity into
consideration.
Listed below are some of the factors
the Bureau intends to consider in
determining whether and how much to
take into account responsible conduct.
This list is not exhaustive, and some of
the factors identified may relate to more
than one category of responsible
conduct.
Self-Assessing
This factor, which can also be
described as self-monitoring or self-
auditing, reflects a proactive
commitment by an entity to use
resources for the prevention and early
detection of violations of Federal
consumer financial law. The Bureau
recognizes that a robust compliance
management system appropriate for the
size and complexity of an entity’s
business will not prevent all violations,
but it will reduce the risk of violations,
and it will often facilitate early
detection of likely violations, which can
limit the size and scope of consumer
harm. Questions the Bureau intends to
consider in determining whether to
provide favorable consideration for self-
assessing activity include:
1. What resources does the entity
devote to compliance? How robust and
effective is its compliance management
system? Is it appropriate for the size and
complexity of the entity’s business?
2. Has the entity taken steps to
improve its compliance management
system when deficiencies have been
identified either by itself or external
regulators? Did the entity ignore obvious
deficiencies in compliance procedures?
Does the entity have a culture of
compliance?
3. Considering the nature of the
violation, did the entity identify the
issue? What is the nature of the
violation or likely violation and how
did it arise? Was the conduct pervasive
or an isolated act? How long did it last?
Did senior personnel participate in, or
turn a blind eye toward, obvious indicia
of misconduct?
4. How was the violation detected and
who uncovered it? If identified by the
entity, how did the entity identify the
issue (e.g., from customer complaints,
audits or monitoring based on routine
risk assessments, or whistleblower
activity)? Was the identification the
result of a robust and effective
compliance management system
including adequate internal audit,
monitoring, and complaint review
processes? Was identification prompted
by an impending exam or an
investigation by a regulator?
5. What self-assessment mechanisms
were in place to effectively prevent,
identify, or limit the conduct that
occurred, elevate it appropriately, and
preserve relevant information? In what
ways, if any, were the entity’s self-
assessing mechanisms particularly
noteworthy and effective?
Self-Reporting
This factor substantially advances the
Bureau’s protection of consumers and
enhances its mission by reducing the
resources it must expend to identify
violations and making those resources
available for other significant matters.
Prompt self-reporting of likely
violations also represents concrete
evidence of an entity’s commitment to
responsibly address the conduct at
issue. Conversely, efforts to conceal a
likely violation from the Bureau
represent concrete evidence of the
entity’s lack of commitment to
responsibly address the conduct at
issue. For these reasons, the Bureau
considers this factor in its evaluation of
an entity’s overall conduct. Of note,
however, an entity’s self-reporting of a
potential issue does not require it to
concede that it has violated the law.
Questions the Bureau intends to
examine in determining whether to
provide favorable consideration for self-
reporting of likely violations of Federal
consumer financial law include:
1. Did the entity completely and
effectively disclose the existence of the
conduct to the Bureau, to other
regulators, and, if applicable, to self-
regulatory organizations? Did the entity
report any additional related
misconduct likely to have occurred?
2. Did the entity report the conduct to
the Bureau without unreasonable delay?
If it delayed, what justification, if any,
existed for the delay? How did the delay
affect the preservation of relevant
information, the ability of the Bureau to
conduct its review or investigation, or
the interests of affected consumers?
3. Did the entity proactively self-
report, or wait until discovery or
disclosure was likely to happen anyway,
for example due to impending
supervisory activity, public company
reporting requirements, the emergence
of a whistleblower, consumer
complaints or actions, or the conduct of
a Bureau investigation?
Remediating
When violations of Federal consumer
financial law have occurred, the
Bureau’s remedial priorities include
obtaining full redress for those injured
by the violations, ensuring that the
entity who violated the law implements
measures designed to prevent the
violations from recurring, and, when
appropriate, effectuating changes in the
entity’s future conduct for the
protection and/or benefit of consumers.
Questions the Bureau intends to
examine in determining whether to
provide favorable consideration for
remediation activity regarding likely
violations of Federal consumer financial
law include:
1. What steps did the entity take upon
learning of the violation? Did it
immediately stop the violation? How
long after the violation was uncovered
did it take to implement an effective
response?
2. What steps did the entity take to
discipline the individuals responsible
for the violation and to prevent the
individuals from repeating the same or
similar conduct?
3. Did the entity conduct an analysis
to determine the number of affected
consumers and the extent to which they
were harmed? Were consumers made
whole through compensation and other
appropriate relief, as applicable? Did
affected consumers receive appropriate
information related to the violations
within a reasonable period of time?
4. What assurances are there that the
violation (or a similar violation) is
unlikely to recur? Did the entity take
measures, such as a root-cause analysis,
to ensure that the issues were addressed
and resolved in a manner likely to
prevent and minimize future violations?
Similarly, have the entity’s business
practices, policies, and procedures
changed to remove harmful incentives
and encourage proper compliance?
Cooperating
Unlike self-assessing and remediating,
which may occur with or without
Bureau involvement, cooperating relates
to the quality of an entity’s interactions
with the Bureau after the Bureau
becomes aware of a likely violation of
Federal consumer financial law, either
through an entity’s self-reporting or the
Bureau’s own efforts. Credit for
cooperating in this context depends on
the extent to which an entity takes steps
above and beyond what the law requires
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Federal Register / Vol. 85, No. 55 / Friday, March 20, 2020 / Rules and Regulations
in its interactions with the Bureau.
Simply meeting those legal obligations
is not a factor that the Bureau intends
to give any special consideration in a
supervisory review or enforcement
investigation. Of note, the Bureau does
not consider an entity’s good faith
assertion of privilege in an enforcement
investigation to be a lack of cooperation;
an entity asserting privileges in good
faith remains eligible for potential
favorable consideration for cooperating.
Questions the Bureau intends to
examine in determining whether to
provide favorable consideration for
cooperating in a Bureau matter include:
1. Did the entity cooperate promptly
and completely with the Bureau and
other appropriate regulatory and law
enforcement bodies? Was that
cooperation present throughout the
course of the review and/or
investigation?
2. Did the entity take proper steps to
develop the facts quickly and
completely and to fully share its
findings with the Bureau? Did it
undertake a thorough review of the
nature, extent, origins, and
consequences of the violation and
related behavior? Who conducted the
review and did they have a vested
interest or bias in the outcome? Were
scope limitations placed on the review?
If so, why and what were they?
3. Did the entity promptly make
available to the Bureau the results of its
review and provide sufficient
documentation reflecting its response to
the situation? Did it provide evidence
with sufficient precision and
completeness to facilitate, among other
things, appropriate actions against
others who violated the law? Did the
entity produce a complete and thorough
written report detailing the findings of
its review? Did it voluntarily disclose
material information not directly
requested by the Bureau or that
otherwise might not have been
uncovered? Did the entity provide all
relevant, non-privileged information
and make assertions of privilege in good
faith?
4. Did the entity direct its employees
to cooperate with the Bureau and make
reasonable efforts to secure such
cooperation? Did it make the most
appropriate person(s) available for
interviews, consultation, and/or sworn
statements?
The Bureau intends for this guidance
to encourage entities subject to the
Bureau’s supervisory and enforcement
authority to engage in more
‘‘responsible conduct,’’ as defined
herein. Such an outcome, the Bureau
believes, would benefit both consumers
and providers of consumer financial
products and services, is in the public
interest, and supports the Bureau’s
efforts to prevent consumer harm.
Regulatory Requirements
This Bulletin is a non-binding general
statement of policy articulating
considerations relevant to the Bureau’s
exercise of its supervisory and
enforcement authority. It is therefore
exempt from notice and comment
rulemaking requirements under the
Administrative Procedure Act pursuant
to 5 U.S.C. 553(b). Because no notice of
proposed rulemaking is required, the
Regulatory Flexibility Act does not
require an initial or final regulatory
flexibility analysis. 5 U.S.C. 603(a),
604(a). The Bureau has determined that
this Bulletin does not impose any new
or revise any existing recordkeeping,
reporting, or disclosure requirements on
covered entities or members of the
public that would be collections of
information requiring OMB approval
under the Paperwork Reduction Act, 44
U.S.C. 3501 et seq.
Pursuant to the Congressional Review
Act, 5 U.S.C. 801 et seq., the Bureau will
submit a report containing this policy
statement and other required
information to the United States Senate,
the United States House of
Representatives, and the Comptroller
General of the United States prior to its
applicability date. The Office of
Information and Regulatory Affairs has
designated this policy statement as not
a ‘‘major rule’’ as defined by 5 U.S.C.
804(2).
Dated: March 6, 2020.
Kathleen L. Kraninger,
Director, Bureau of Consumer Financial
Protection.
[FR Doc. 2020–05505 Filed 3–19–20; 8:45 am]
BILLING CODE 4810–AM–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2019–0863; Product
Identifier 2019–NM–157–AD; Amendment
39–19867; AD 2020–05–17]
RIN 2120–AA64
Airworthiness Directives; Airbus SAS
Airplanes
AGENCY
: Federal Aviation
Administration (FAA), Department of
Transportation (DOT).
ACTION
: Final rule.
SUMMARY
: The FAA is adopting a new
airworthiness directive (AD) for certain
Airbus SAS Model A318–112, A319–
111, A319–112, A319–113, A319–114,
A319–115, A319–131, A319–132, A319–
133, A320–211, A320–212, A320–214,
A320–216, A320–231, A320–232, A320–
233, A320–251N, and A320–271N
airplanes. This AD was prompted by a
report of marginal clearance between
certain fuel sensor covers on both left-
hand (LH) and right-hand (RH) wings.
This AD requires the replacement of
certain fuel level sensor brackets, as
specified in a European Union Aviation
Safety Agency (EASA) AD, which is
incorporated by reference. The FAA is
issuing this AD to address the unsafe
condition on these products.
DATES
: This AD is effective April 24,
2020.
The Director of the Federal Register
approved the incorporation by reference
of a certain publication listed in this AD
as of April 24, 2020.
ADDRESSES
: For the material
incorporated by reference (IBR) in this
AD, contact the EASA, Konrad-
Adenauer-Ufer 3, 50668 Cologne,
Germany; telephone +49 221 89990
1000; email ADs@easa.europa.eu;
internet www.easa.europa.eu. You may
find this IBR material on the EASA
website at https://ad.easa.europa.eu.
You may view this IBR material at the
FAA, Transport Standards Branch, 2200
South 216th St., Des Moines, WA. For
information on the availability of this
material at the FAA, call 206–231–3195.
It is also available in the AD docket on
the internet at https://
www.regulations.gov by searching for
and locating Docket No. FAA–2019–
0863.
Examining the AD Docket
You may examine the AD docket on
the internet at https://
www.regulations.gov by searching for
and locating Docket No. FAA–2019–
0863; or in person at Docket Operations
between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
The AD docket contains this final rule,
the regulatory evaluation, any
comments received, and other
information. The address for Docket
Operations is U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue SE,
Washington, DC 20590.
FOR FURTHER INFORMATION CONTACT
:
Sanjay Ralhan, Aerospace Engineer,
International Section, Transport
Standards Branch, FAA, 2200 South
216th St., Des Moines, WA 98198;
telephone and fax 206–231–3223; email
Sanjay.Ralhan@faa.gov.
SUPPLEMENTARY INFORMATION
:
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