Supervisory Appeals Process
| Published date | 22 February 2024 |
| Record Number | 2024-03615 |
| Citation | 89 FR 13263 |
| Court | Consumer Financial Protection Bureau |
| Section | Rules and Regulations |
Federal Register, Volume 89 Issue 36 (Thursday, February 22, 2024)
[Federal Register Volume 89, Number 36 (Thursday, February 22, 2024)]
[Rules and Regulations]
[Pages 13263-13265]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-03615]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 89, No. 36 / Thursday, February 22, 2024 /
Rules and Regulations
[[Page 13263]]
CONSUMER FINANCIAL PROTECTION BUREAU
12 CFR Chapter X
Supervisory Appeals Process
AGENCY: Consumer Financial Protection Bureau.
ACTION: Supervisory appeals process; update.
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SUMMARY: The Consumer Financial Protection Bureau (CFPB or Bureau) is
updating its internal supervisory appeals process for institutions
seeking to appeal a compliance rating or an adverse material finding.
DATES: This revised supervisory appeals process is applicable as of
February 22, 2024.
FOR FURTHER INFORMATION CONTACT: George Karithanom, Regulatory
Implementation & Guidance Program Analyst, Office of Regulations, at
(202) 435-7700 or [email protected]. If you require this
document in an alternative electronic format, please contact
[email protected].
SUPPLEMENTARY INFORMATION:
I. Overview
The CFPB first published its process for supervisory appeals on
October 31, 2012, as Bureau Bulletin 2012-07.\1\ The process was
substantially modeled upon the practices of the prudential regulators.
On November 3, 2015, the Bureau revised its process, superseding the
2012 Bulletin.\2\ The Bureau has reviewed its current process and the
revisions made by prudential regulators since 2015. As a result, the
Bureau is revising its process to broaden the Bureau officials eligible
to evaluate appealed matters, the options for resolving an appeal, and
the matters subject to appeal.
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\1\ https://files.consumerfinance.gov/f/201210_cfpb_bulletin_supervisory-appeals-process.pdf.
\2\ https://files.consumerfinance.gov/f/201510_cfpb_appeals-of-supervisory-matters.pdf.
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The main changes in the revised supervisory appeals process, which
is set out in part II below, are as follows. First, the revised process
broadens the pool of potential members of the appeals committee to
include any CFPB manager who did not participate in the underlying
matter being appealed and who has relevant expertise on the issue(s)
raised by the appeal, not only managers from Supervision as under the
previous process. The Supervision Director will select three CFPB
managers who meet the criteria to serve on the appeals committee, which
will advise the Supervision Director on how to resolve the appeal. The
CFPB's General Counsel will designate legal counsel to advise the
committee. Second, under the revised process there is a new option for
resolving the appeal, which is remanding the matter to Supervision
staff for consideration of a modified finding, in addition to the
existing options of upholding or rescinding the finding. Third, under
the revised process institutions may file an appeal as to any
compliance rating issued to the institution, not only an adverse rating
(e.g., 3, 4, or 5 rating) as under the previous process. Finally, the
revised process includes additional clarifying changes and specifies
that it applies to appeals pending on the date it is published.
II. Appeals of Supervisory Matters 3
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\3\ This supervisory appeals process is not intended to nor
should it be construed to: (1) restrict or limit in any way the
CFPB's discretion in exercising its authorities; (2) limit the CFPB
Director's authority to provide direction to CFPB staff at any time;
(3) constitute an interpretation of law; or (4) create or confer
upon any person, including one who is the subject of CFPB
supervisory, investigation or enforcement activity, any substantive
or procedural rights or defenses that are enforceable in any manner.
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A. General Purpose
To promote a constructive supervisory relationship with the
financial service providers, including depository institutions, under
its jurisdiction, the Consumer Financial Protection Bureau (CFPB or
Bureau) provides a supervisory appeals process.
Throughout the supervisory process, the CFPB and its supervised
entities should engage in an open and candid dialogue on a continuing
basis. During an examination or review, CFPB examiners and regional
management should ensure that supervised entities understand examiner
concerns and issues that arise. In turn, supervised entities should
present all relevant information in a timely manner during the
examination or review process to ensure that examiners' analyses are
complete.
After an examination or targeted review, if a supervised entity
disagrees with a compliance rating \4\ or any underlying adverse
findings set forth in the relevant examination report, or adverse
findings set forth in a supervisory letter,\5\ the entity may appeal.
The key aspects of the appeals process as outlined in this document
are:
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\4\ See the CFPB Supervision and Examination Manual's chapter on
the examination process. http://www.consumerfinance.gov/guidance/supervision/manual/.
\5\ Supervision may issue supervisory letters for its reviews of
consumer compliance matters that do not result in the issuance of
the compliance rating. Supervised entities may appeal adverse
findings described in a supervisory letter in the same manner as
such findings in an examination report. Adverse findings are those
that result in a Matter Requiring Attention.
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CFPB managers who did not participate in the supervisory
matter and whose knowledge and background enable them to meaningfully
evaluate supervisory matters will be involved in reviewing appeals;
The CFPB will only entertain appeals in writing, with
documentation supporting the appeal, and within specified timeframes;
and
The CFPB will take measures to ensure that an entity's
filing of an appeal does not have an adverse effect on the entity's
relationship with the CFPB.
B. Entities Who May Initiate Appeals
Under the circumstances noted below, any entity subject to an
examination under the CFPB's supervisory authority may use the appeals
process.
C. Supervisory Matters Subject to Appeal
An entity may appeal final CFPB compliance ratings or any
underlying adverse findings, or adverse findings conveyed to an entity
in a supervisory letter. Adverse findings are those that result in a
Matter Requiring Attention by the board of directors or principal(s) of
the entity.
[[Page 13264]]
An entity may not use this supervisory appeals process to appeal:
Preliminary supervisory matters (including preliminary
findings);
CFPB examiners' decisions to initiate supervisory
measures, such as memoranda of understanding;
Enforcement-related actions and decisions, including
cease-and-desist orders and determinations to proceed with an
investigation or public enforcement action;
Adverse findings or an unsatisfactory rating contained in
a supervisory letter or examination report related \6\ to a recommended
or pending investigation or public enforcement action; \77\ or
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\6\ A supervisory letter or an examination report is related to
an investigation or enforcement action when it contains any part of
the underlying facts and circumstances that form the basis of the
investigation or enforcement action.
\7\ After an investigation or enforcement action has been
resolved, the supervisory findings in a related supervisory letter
or examination report may be appealed. In that case, the date of
resolution of the investigation or public enforcement action will be
treated as the date of the email transmitting an appealable
supervisory letter or examination report for the purpose of
determining the deadline for a written record.
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Referrals of information to other law enforcement and
regulatory agencies.
An entity may only appeal a finding once. For example, an entity
that receives a rating in an examination report that is based on an
earlier finding memorialized in a supervisory letter may appeal the
letter or the report, but not both.
D. Pre-Appeal Resolution Efforts
The CFPB expects its supervisory staff, including examiners and
regional management, to discuss with supervised entities their
preliminary findings and any proposed ratings before an examination or
supervisory review is completed. In addition, the CFPB encourages
supervised entities to fully engage in this dialogue and, when
disagreements occur, to present all available information to support
this position. Through such communication, the CFPB anticipates that
most disputes can be resolved before an examination is final.
E. Appeal Process
Within 30 business days of the date of the email transmitting an
appealable examination report containing a compliance rating, or an
appealable supervisory letter, the supervised entity may submit a
written appeal via email to: [email protected].\8\ The
subject line of the email should state the name of the supervised
entity and include the words: ``APPEAL OF SUPERVISORY MATTER.'' The
appeal request should include:
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\8\ The date that the entity or CFPB receives by email any
material referenced in this supervisory appeals process will be
considered the receipt date.
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a. A description of the issues in dispute and appropriate
supporting information; \9\
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\9\ If the staff reviewing the appeal notifies the supervised
entity that the entity has not submitted sufficient supporting
information, the entity will have 10 business days within which to
resubmit the appeal with supporting information.
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b. A summary of informal efforts made to resolve the dispute with
examiners or other CFPB Supervision staff;
c. A copy of a board resolution or other appropriate formal
document issued by the entity's board of directors or principal(s),
which authorizes the filing of an appeal; and
d. A statement of whether or not the entity's board of directors or
principal(s) requests an oral presentation to the CFPB. If an oral
presentation is requested, a member of the board or principal must
participate in and lead the oral presentation.
This revised supervisory appeals process applies to any appeal
pending with Supervision on the date it is published in the Federal
Register.
Within five business days of receipt of an appeal, the Supervision
Director \10\ will designate a committee composed of three CFPB
managers who were not involved in the supervisory matter being appealed
and who have relevant experience on the issue raised by the appeal. The
General Counsel \11\ will designate legal counsel to advise the
committee. The committee will:
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\10\ The position of ``Supervision Director'' encompasses the
combined positions of the Assistant Director for Supervision Policy
and the Assistant Director for Supervision Examinations. Previously,
these positions were occupied by the same individual, and the Bureau
is in the process of consolidating these two positions into one
Supervision Director position. In this supervisory appeals process,
the Supervision Director means the Supervision Director or another
CFPB employee designated by the CFPB Director or by the Supervision
Director.
\11\ In this supervisory appeals process, the ``General
Counsel'' means the General Counsel of the CFPB or that person's
designee.
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a. Review the supervised entity's written appeal, the examination
report or supervisory letter at issue, and supporting documentation for
both;
b. If applicable, send a copy of the appeal to the prudential
regulator of the appealing entity and solicit its views;
c. Solicit input from other CFPB personnel, such as examination
staff and CFPB Headquarters staff (including those involved in the
specific matter under appeal); and
d. Hear a presentation from the appealing entity,\12\ if requested.
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\12\ Any such presentation must be brief and must be limited to
issues raised in the written appeal.
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The committee will review the supervisory letter or examination
report for consistency with the policies, practices, and mission of the
CFPB and the overall reasonableness of the examiners' determinations,
and support offered for, the supervisory findings. Only the facts and
circumstances upon which a supervisory finding was made will be
considered by the committee. It is the appellant's burden to show that
the contested supervisory findings should be modified or set aside.
Upon conclusion of the review, the committee will advise the
Supervision Director in formulating a written decision on the appeal.
The decision may uphold or rescind the finding; alternatively, the
decision may remand the finding to Supervision staff who will consider
a modified finding. The decision will be transmitted to the appealing
entity by email, copying appropriate internal parties and the
prudential regulator or state regulator where appropriate. The CFPB
expects that a decision will be issued within 60 business days from the
assignment of the appeal to the committee, but the committee will
notify the supervised entity by email if a longer period will be
needed.
The decision under the previous paragraph cannot be the subject of
another appeal under this supervisory appeals process.
F. Confidentiality
The appeals process will be confidential and submissions by
supervised entities will be treated in accordance with the CFPB
regulations and guidance on confidential supervisory information.\13\
The CFPB may in the future publish summaries of issues raised in
appeals, and the outcomes of such appeals, in a manner that will
protect from disclosure the identity of the appealing entity and any
other confidential information.
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\13\ 12 CFR 1070.40-48.
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G. Role of the CFPB Ombudsman Office
The CFPB Ombudsman Office serves as an independent, impartial, and
confidential resource. It will act as a liaison between supervised
entities and the CFPB, providing information about the appeals process.
The Ombudsman will facilitate resolution of any process-related issues
before an appeal is filed with the CFPB and will address process-
related issues during the appeal. A supervised entity's reaching out to
the
[[Page 13265]]
Ombudsman will not delay or stay any statutory, regulatory, or agency
timeframes.
H. Effect on the Supervisory Relationship
As noted previously, the CFPB encourages an open dialogue with its
supervised entities and views appeals as one aspect of such dialogue.
As such, the CFPB will take measures to ensure that an entity's filing
of an appeal does not have a negative effect on its supervisory
relationship with the CFPB. Any entity with concerns about its
relationship with the CFPB should contact the CFPB's Ombudsman who will
handle such concerns in a confidential manner, if requested.
Information on how to contact the Ombudsman can be found at http://www.consumerfinance.gov/ombudsman/.
III. Regulatory Matters
This supervisory appeals process is a rule of agency organization,
procedure, or practice under the Administrative Procedure Act.\14\
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\14\ 5 U.S.C. 553(b).
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The CFPB has determined that this supervisory appeals process 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 approval by the
Office of Management and Budget under the Paperwork Reduction Act.\15\
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\15\ 44 U.S.C. 3501-3521.
Rohit Chopra,
Director, Consumer Financial Protection Bureau.
[FR Doc. 2024-03615 Filed 2-21-24; 8:45 am]
BILLING CODE 4810-AM-P
