Supervisory Highlights, Issue 19 (Summer 2019)
| Published date | 19 September 2019 |
| Citation | 84 FR 49250 |
| Record Number | 2019-20215 |
| Section | Notices |
| Court | Consumer Financial Protection Bureau |
Federal Register, Volume 84 Issue 182 (Thursday, September 19, 2019)
[Federal Register Volume 84, Number 182 (Thursday, September 19, 2019)]
[Notices]
[Pages 49250-49255]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-20215]
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BUREAU OF CONSUMER FINANCIAL PROTECTION
Supervisory Highlights, Issue 19 (Summer 2019)
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Supervisory highlights.
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SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is
issuing its nineteenth edition of its Supervisory Highlights. In this
issue of Supervisory Highlights, we report examination findings in the
areas of automobile loan origination, credit card account management,
debt collection, furnishing, and mortgage origination that were
generally completed between December 2018 and March 2019 (unless
otherwise stated). The report does not impose any new or different
legal requirements, and all violations described in the report are
based only on those specific facts and circumstances noted during those
examinations.
DATES: The Bureau released this edition of the Supervisory Highlights
on its website on September 13, 2019.
FOR FURTHER INFORMATION CONTACT: Jaclyn Sellers, Attorney-Advisor, at
(202) 435-7449. If you require this document in an alternative
electronic format, please contact [email protected].
SUPPLEMENTARY INFORMATION:
1. Introduction
The Consumer Financial Protection Bureau is committed to a consumer
financial marketplace that is free, innovative, competitive, and
transparent, where the rights of all parties are protected by the rule
of law, and where consumers are free to choose the products and
services that best fit their individual needs. To effectively
accomplish this, the Bureau remains committed to sharing with the
public key findings from its supervisory work to help industry limit
risks to consumers and comply with Federal consumer financial law.
[[Page 49251]]
The findings included in this report cover examinations in the
areas of automobile loan origination, credit card account management,
debt collection, furnishing, and mortgage origination that were
generally completed between December 2018 and March 2019 (unless
otherwise stated).
It is important to keep in mind that institutions are subject only
to the requirements of relevant laws and regulations. The information
contained in Supervisory Highlights is disseminated to help
institutions better understand how the Bureau examines institutions for
compliance with those requirements. This document does not impose any
new or different legal requirements. In addition, the legal violations
described in this and previous issues of Supervisory Highlights are
based on the particular facts and circumstances reviewed by the Bureau
as part of its examinations. A conclusion that a legal violation exists
on the facts and circumstances described here may not lead to such a
finding under different facts and circumstances.
We invite readers with questions or comments about the findings and
legal analysis reported in Supervisory Highlights to contact us at
[email protected].
2. Supervisory Observations
2.1 Automobile Loan Origination
The Bureau continues to examine auto loan origination activities,
including assessing whether originators have engaged in any unfair,
deceptive, or abusive acts or practices prohibited by the Consumer
Financial Protection Act of 2010 (CFPA).
2.1.1 Abusive Act or Practice When Selling Add-On GAP Products
Under the prohibition against abusive acts or practices in sections
1031 and 1036 of the CFPA,\1\ an act or practice is abusive if, among
other things, it takes unreasonable advantage of a consumer's lack of
understanding of the material risks, costs, or conditions of the
product or service.\2\
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\1\ 12 U.S.C. 5531 and 12 U.S.C. 5536.
\2\ 12 U.S.C. 5531(d)(2)(A).
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Some auto lenders may sell consumers a guaranteed asset protection
(GAP) product to cover the difference, or ``gap,'' between the amount
the consumer owes on the auto loan and the amount received from the
auto insurer in the event a vehicle is stolen, damaged, or totaled.
Such a gap is more likely to occur in an auto loan with a high loan-to-
value (LTV) ratio than one with a low LTV, because in a loan with a low
LTV, the insurance payout for a totaled vehicle may cover the
outstanding debt.
One or more examinations completed in 2018 \3\ found instances in
which auto lenders sold a GAP product to consumers under circumstances
that led to an abusive practice. Specifically, examiners observed that
lenders sold a GAP product to consumers whose low LTV meant that they
would not benefit from the product. By purchasing a product they would
not benefit from, consumers demonstrated that they lacked an
understanding of a material aspect of the product. The lenders had
sufficient information to know that these consumers would not benefit
from the product. These sales show that the lenders took unreasonable
advantage of the consumers' lack of understanding of the material
risks, costs, or conditions of the product. In response to these
examination findings, the lenders have undertaken remedial and
corrective actions, including reimbursing consumers for the cost of the
product and establishing an LTV minimum for GAP product sales.
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\3\ This examination work was completed prior to the review
period for this report.
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2.2 Credit Card Account Management
The Bureau continues to examine the credit card account management
operations of one or more supervised entities. These examinations may
focus on all aspects of credit card origination and account servicing
for compliance with various Federal consumer financial laws including
the Truth in Lending Act and its implementing regulation, Regulation Z.
Selected recent findings are below.
2.2.1 Triggered Disclosures for Online Credit Card Advertisements
Regulation Z, 12 CFR 1026.16(b), requires credit card issuers in
credit card advertisements to clearly and conspicuously provide certain
disclosures if the advertisements contain certain pricing terms
(``triggering terms'').
In one or more examinations completed in 2018,\4\ examiners found
that entities failed to clearly and conspicuously provide disclosures
required by triggering terms in online advertisements. In some
instances, the triggered disclosures were available to consumers via a
hyperlink that was not labeled in a way that referred to the triggered
disclosures. Consumers would have to click on the insufficiently clear
or conspicuous hyperlink, and then navigate through an online
application before arriving at triggered disclosures. In other
instances, consumers had to click on multiple hyperlinks and could only
view the triggered disclosures after completing an eight-page
application. Issuers have undertaken corrective actions in these cases
in response to examination findings.
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\4\ This examination work was completed prior to the review
period for this report.
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2.2.2 Offset of Credit Card Debt
Regulation Z, 12 CFR 1026.12(d), prohibits credit card issuers from
offsetting credit card debt with funds the consumer has on deposit with
the issuer. However, subsection 1026.12(d)(2) expressly permits issuers
to obtain or enforce a consensual security interest in such funds, so
long as certain requirements specified in the Staff Commentary are met.
Such security interests must be affirmatively agreed to by the consumer
and must be disclosed in the account-opening disclosures. A security
interest may not simply be the functional equivalent of offset,
however. Thus, routinely including a provision in a cardholder
agreement indicating that consumers are giving a security interest in
any deposit accounts maintained with the issuers would not qualify for
the exception under subsection 1026.12(d)(2). Instead, for a security
interest to qualify, the consumer must be aware that granting a
security interest is a condition for the credit card (or for more
favorable account terms) and must specifically intend to grant a
security interest in the deposit account. Indicators of the consumers'
awareness and intent include at least one of the following (or a
substantially similar procedure):
Separate signature or initials on the agreement indicating
that a security interest is being given;
Placement of the security agreement on a separate page, or
otherwise separate security interest provisions from other contract and
disclosure provisions; or
Reference to a specific amount of deposited funds or to a
specific deposit account number.
One or more examinations completed in 2018 \5\ found that issuers
violated Regulation Z, 12 CFR 1026.12(d)(1), by offsetting consumers'
credit card debt against funds that the consumers had on deposit with
the issuers without sufficient indication of the consumer's awareness
of, and intent to grant, a security interest in those funds. The
issuers' policies or procedures required the issuers to have obtained a
signed authorization form from consumers
[[Page 49252]]
before attempting to enforce the security interest. However, in some
instances, the issuers enforced the security interest against the funds
on deposit where such forms had not been signed by the consumer or
could not be located. In response to examination findings, issuers have
implemented corrective action to ensure compliance with the regulatory
requirements.
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\5\ This examination work was completed prior to the review
period for this report.
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2.2.3 Deceptive Threats of Repossession or Foreclosure in Credit Card
Collections
Under the prohibition against deceptive acts or practices in
sections 1031 and 1036 of the CFPA,\6\ an act or practice is deceptive
when: (1) It misleads or is likely to mislead the consumer; (2) the
consumer's interpretation is reasonable under the circumstances; and
(3) the misleading act or practice is material. In one or more
examinations completed in 2018,\7\ examiners found that one or more
credit card issuer(s) misled or were likely to mislead consumer credit
card holders by sending collection letters that suggested that the
issuer(s) could repossess consumers' automobiles, or foreclose on
homes, securing loans or mortgages owned by the issuer(s). In fact, the
issuer(s) did not repossess any vehicles or foreclose on any mortgages
in connection with delinquent credit card accounts, and it was against
the policies of the issuer(s) to do so. The representations by the
issuer(s) were likely to mislead consumers into believing that they
might be subject to repossession or foreclosure for delinquent credit
card accounts if they had an automobile loan or mortgage with the
issuer(s). The consumers' beliefs were reasonable given the
representations made in the collection letters. The misrepresentations
were material since they were likely to induce cardholders to change
their conduct with respect to their delinquent credit card accounts. In
response to these examiner findings, the issuers discontinued the use
of the collection letters.
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\6\ 12 U.S.C. 5531 and 12 U.S.C. 5536.
\7\ This examination work was completed prior to the review
period for this report.
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2.2.4 Deceptive Marketing Regarding Secured Credit Card Accounts
Under the prohibition against deceptive acts or practices in
sections 1031 and 1036 of the CFPA,\8\ a practice is deceptive when:
(1) It misleads or is likely to mislead the consumer; (2) the
consumer's interpretation is reasonable under the circumstances; and
(3) the misleading act or practice is material. In one or more
examinations, examiners found that credit card issuers misled or were
likely to mislead consumers by orally representing that secured credit
card accounts would automatically graduate (or be upgraded) to
unsecured credit card accounts on a specific timeframe, such as six or
twelve months after origination, so long as cardholders maintained
their accounts in good standing. In fact, the issuers did not upgrade
secured card accounts on any preset timeframe, and upgrade or
graduation was conditioned on additional factors, as some subsequent
disclosures and online and print solicitations suggested. The oral
representations misled or were likely to mislead consumers about both
the timing and likelihood of upgrade or graduation, and subsequent
written disclosures were inadequate to cure the oral representations.
The consumers' interpretation of the preset graduation or upgrade was
reasonable based on the oral representations. The representations were
also material to the consumers' decisions to apply for a secured card
account with the issuers.
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\8\ 12 U.S.C. 5531 and 12 U.S.C. 5536.
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In one or more examinations, examiners found that credit card
issuers misled or were likely to mislead consumers by representing in
prescreened offers of credit that secured credit card accounts subject
to an annual fee would be ``periodically'' reviewed for graduation (or
upgrade). In fact, the issuers did not review such accounts for a year
or more but did not provide additional disclosures to accountholders or
modify their marketing materials. Such representations were likely to
mislead consumers about the timing for a potential upgrade. Consumers'
interpretations of such representations were reasonable under the
circumstances. The issuers' misrepresentations were material to
consumers' decisions to apply for a secured card account and to
existing cardholders' decisions to maintain their secured card
accounts.
In all the above cases, the issuers have developed action plans to
identify and compensate impacted consumers, and updated their policies
and procedures to prevent future violations.
2.3 Debt Collection
Supervision continues to examine consumer debt collection for
compliance with various Federal consumer financial laws, including the
Fair Debt Collection Practices Act (FDCPA). Below are findings
resulting from these supervisory activities.
2.3.1 False Representation of the Amount and Legal Status of Debt
Section 807 of the FDCPA prohibits the use of any false, deceptive,
or misleading representation or means in the collection of any debt.
Specifically, section 807(2)(A) of the FDCPA prohibits the false
representation of the character, amount, or legal status of any debt.
Examiners found that one or more debt collectors claimed and collected
from consumers, interest not authorized by the underlying contracts
between the debt collectors and the creditors. In doing so, one or more
debt collectors falsely represented to consumers the amount due and
authorized in violation of section 807(2)(A) of the FDCPA. In response
to these examination findings, one or more debt collectors conducted or
are conducting a full accounting of these charges and providing
remediation for affected consumer accounts, including accounts in which
consumers paid in full, settled in full, or made partial payments.
2.4 Furnishing
Entities that furnish information relating to consumers to consumer
reporting companies for inclusion in consumer reports (furnishers) play
a vital role in the consumer reporting process. They are subject to
several requirements under the Fair Credit Reporting Act (FCRA) \9\ and
its implementing regulation, Regulation V,\10\ including accuracy and
dispute handling requirements.
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\9\ 15 U.S.C. 1681s-2(a)-(e).
\10\ 12 CFR 1022.40-43.
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In one or more recent furnishing reviews, examiners found
deficiencies in furnisher compliance with FCRA accuracy and dispute
investigation requirements.
2.4.1 Duty To Timely Complete Dispute Investigations
The FCRA requires that when a furnisher receives notice of a
dispute from a credit reporting company (CRC) pursuant to FCRA section
623(b)(1),\11\ the furnisher must complete its investigation of
disputes ``before the expiration of the period under section 611(a)(1)
. . .'' within which the CRC must complete its own dispute
investigation.\12\ This period of time is normally 30 days from the
date the CRC receives a dispute and can be extended to 45 days in
certain limited circumstances.\13\ Examiners found that one or more
furnishers failed to complete dispute investigations within
[[Page 49253]]
the required time period. At one or more furnishers, examiners found
certain disputes of which the furnisher(s) received notice from the CRC
but failed to conduct an investigation or respond to the CRC. In
response to these findings, one or more furnishers are establishing and
implementing enhanced monitoring activities, and policies and
procedures regarding compliance with furnisher-specific requirements of
the FCRA.
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\11\ 15 U.S.C. 1681s-2(b)(1).
\12\ 15 U.S.C. 1681s-2(b)(2).
\13\ 15 U.S.C. 1681i(a)(1)(B).
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2.4.2 Duty To Provide Results of Dispute Investigations to CRCs
The FCRA requires that if a furnisher's dispute investigation finds
that disputed information is incomplete or inaccurate, the furnisher
must report the results not only to the CRC that sent the dispute to
the furnisher but also to all nationwide CRCs to which the furnisher
provided the information.\14\ Examiners found that one or more
furnishers failed to report updates or corrections to information found
to be incomplete or inaccurate following a dispute investigation to all
applicable CRCs. At one or more furnishers, examiners found the
systematic failure of reporting dispute investigation results to a
particular CRC. In response to these findings, one or more furnishers
are establishing and implementing enhanced monitoring activities, as
well as policies and procedures regarding compliance with furnisher-
specific requirements of the FCRA, and providing validation of
corrective action.
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\14\ 15 U.S.C. 1681s-2(b)(1)(D).
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2.4.3 Duty To Promptly Correct and Update Previously Furnished
Information
The FCRA requires that if a furnisher determines that previously
furnished information is not complete or accurate, the furnisher must
promptly notify the CRC of that determination and provide the CRC with
any corrections to that information, or any additional information,
that is necessary to make the information complete and accurate.\15\ In
addition, a furnisher cannot thereafter furnish to the CRC any of the
information that remains incomplete or inaccurate.\16\
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\15\ 15 U.S.C. 1681s-2(a)(2)(B).
\16\ 15 U.S.C. 1681s-2(a)(2)(B).
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Examiners found that one or more furnishers failed to promptly send
corrections or updates to all applicable CRCs after making a
determination, as reflected in the relevant system of record, that
previously furnished information about certain accounts was no longer
accurate. As a result, one or more furnishers are establishing and
implementing enhanced monitoring activities, as well as policies and
procedures regarding compliance with furnisher-specific requirements of
the FCRA, and providing validation of corrective action.
Examiners found that one or more furnishers of deposit account
information failed to furnish updated information regarding accounts
that were paid-in-full or settled-in-full. When one or more furnishers
removed their company identification from account number fields at the
request of a nationwide specialty CRC, and the removal of the
identification changed the search key that the furnishers used for
matching when making account updates, the furnishers discovered that
almost two thousand accounts were not corrected to reflect the paid-in-
full or settled-in-full status. Examiners observed that one or more
furnishers did not promptly notify the nationwide specialty CRC after
having determined that the accounts were not corrected and updated, in
violation of the FCRA. In light of these findings, one or more
furnishers have taken action to update and correct information that it
previously furnished when they determined that the information was not
complete or accurate.
2.4.4 Duty To Provide Notice of Dispute
The FCRA prohibits furnishers from furnishing information to any
CRC without notice that such information is disputed if the
completeness or accuracy of the information furnished is disputed by a
consumer.\17\ Examiners found that one or more furnishers of deposit
account information received consumer disputes and then continued
furnishing information about the disputed accounts for several months
without notifying a nationwide specialty CRC that the information
furnished was disputed, in violation of the FCRA. As a result of these
examination findings, one or more furnishers have taken action to
provide timely notice to CRCs upon receipt of a direct dispute from a
consumer who has disputed information previously furnished.
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\17\ 15 U.S.C. 1682s-2(a)(3).
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2.4.5 Regulation V Duty To Establish and Implement Policies and
Procedures
Regulation V requires furnishers to establish and implement
reasonable written policies and procedures regarding the accuracy and
integrity of the information relating to consumers that it furnishes to
a CRC.\18\ Examiners found that one or more furnishers of deposit
account information failed to implement reasonable written policies and
procedures regarding the accuracy and integrity of deposit account
information it furnished to nationwide specialty CRCs. Such policies
and procedures were also not appropriate to the nature, size,
complexity, and scope of the furnishing activities. For example, there
were no written policies and procedures for handling disputes regarding
account information from certain files. The existing policies also did
not address compliance with FCRA dispute requirements, such as the duty
to conduct a reasonable investigation. There were also no policies and
procedures for training, monitoring, or conducting internal audits
regarding a business unit's responsibilities to forward disputes of
furnished information. Finally, one or more furnishers failed to have
policies and procedures for one business unit to conduct investigations
of consumer disputes alleging account abuse caused by fraud. As a
result of these observations, one or more furnishers have taken action
to comply with the Regulation V requirements to establish and implement
reasonable written policies and procedures regarding the accuracy and
integrity of information furnished to nationwide CRCs.
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\18\ 12 CFR 1022.42(a).
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Regulation V requires furnishers to consider and incorporate, as
appropriate, the guidelines in appendix E of Regulation V.\19\
Examiners found that one or more furnishers of deposit account
information failed to consider the guidelines in appendix E of
Regulation V. For example, such guidance states that a furnisher's
policies and procedures should consider and incorporate, as
appropriate, conducting ``reasonable investigations of consumer
disputes and take appropriate action based on the outcome of such
investigations.'' However, the policies of one or more furnishers did
not consider and incorporate such guidance. Based on examiner findings,
one or more furnishers have taken action to consider and incorporate,
as appropriate, the guidance in appendix E of Regulation V.
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\19\ 12 CFR 1022.42(b), appendix E.
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2.5 Mortgage Origination
Supervision continues to examine both forward and reverse mortgage
origination activities for compliance with various Federal consumer
financial laws, including the Truth in Lending
[[Page 49254]]
Act and its implementing regulation, Regulation Z.
2.5.1 Inaccurate APR and TALC Disclosures in Reverse Mortgage
Transactions
Regulation Z requires creditors to disclose the annual percentage
rate (APR) in accordance with either the actuarial method or the U.S.
Rule method.\20\ The explanations, equations, and instructions for
determining the APR in accordance with the actuarial method are set
forth in appendix J to 12 CFR part 1026.\21\
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\20\ 12 CFR 1026.22(a)(1).
\21\ Id.
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Appendix J provides that the unit-period for a single advance,
single payment transaction, for the purposes of determining the APR,
shall be the term of the transaction, but shall not exceed one
year.\22\ In all other transactions, the unit-period shall be the
common period that occurs most frequently in the transaction unless an
exception applies.\23\
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\22\ 12 CFR part 1026, app. J(b)(4)(ii).
\23\ 12 CFR part 1026, app. J(b)(4)(i).
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Generally, by its terms, a closed-end reverse mortgage is a single
advance, single payment transaction because it includes a single lump-
sum advance at origination and a single payment due at the end of the
loan term. Thus, per appendix J and Regulation Z, the unit-period for
the purposes of determining the APR for such a closed-end reverse
mortgage, with a term greater than a year, is one year.
In addition to a single lump-sum advance at origination, some
closed-end reverse mortgages may have multiple advances throughout the
loan term. For example, a closed-end reverse mortgage with a life-
expectancy set-aside (LESA) typically has a set number of semiannual
advances for the payment of property taxes, and flood and hazard
insurance premiums. Thus, per appendix J and Regulation Z, the unit-
period for the purposes of determining the APR for such a loan would be
six months because that would be the common period that occurs most
frequently in the transaction.
In addition, Regulation Z states that the APR shall be considered
accurate for a regular transaction if it is not more than \1/8\ of one
percentage point above or below the APR determined in accordance with
section 1026.22(a)(1).\24\ Likewise, the APR shall be considered
accurate for an irregular transaction if it is not more than \1/4\ of
one percentage point above or below the APR determined in accordance
with section 1026.22(a)(1).\25\
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\24\ 12 CFR 1026.22(a)(2).
\25\ 12 CFR 1026.22(a)(3).
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In one or more examinations, examiners observed that creditors were
disclosing inaccurate APRs for closed-end reverse mortgages.
Specifically, while conducting loan file reviews, examiners observed
creditors using a unit-period of one month instead of one year to
calculate the APR, leading to inaccurate calculations outside of
Regulation Z's permissible tolerances.\26\ In response to this finding,
the creditors have revised their calculation methodology to reflect the
correct unit-period and provided affected consumers with
reimbursements.
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\26\ 12 CFR 1026.22(a)(2) and (3).
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Examiners also found creditors disclosing inaccurate APRs for
closed-end reverse mortgages with a LESA. While conducting loan file
reviews, examiners observed creditors using a unit-period of one month
instead of six months to calculate the APR, leading to inaccurate
calculations outside of Regulation Z's permissible tolerances.\27\ In
response to this finding, the creditors have revised their calculation
methodologies to reflect the correct unit-period.
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\27\ Id.
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Examiners observed similar issues in relation to the calculation of
the total annual loan cost (TALC). Regulation Z requires that, in a
reverse mortgage transaction, the creditor provide a good-faith
projection of the total cost of credit, determined in accordance with
paragraph (c) of this section and expressed as a table of ``total
annual loan cost rates,'' in accordance with appendix K of 12 CFR part
1026.\28\
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\28\ 12 CFR 1026.33(b)(2).
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Per appendix K, the unit-period for a single advance, single
payment transaction, for the purposes of determining the TALC rate,
shall be the term of the transaction, but shall not exceed one
year.\29\ Both a closed-end reverse mortgage and an open-end reverse
mortgage with a line of credit are single advance, single payment
transactions, even though the latter may have multiple advances over
the loan term.\30\ Accordingly, the appropriate unit-period for such
transactions when determining the TALC rate and the future value of all
advances, a variable of the TALC equation, is one year. While
conducting loan file reviews, examiners observed creditors using a
unit-period of one month instead of one year to calculate the TALC rate
and the future value of all advances, leading to inaccurate TALC
disclosures. In response to these findings, the creditors have revised
their calculation methodologies to reflect the correct unit-period.
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\29\ 12 CFR part 1026, app. K(b)(4)(ii).
\30\ 12 CFR part 1026, app. K(b)(9) (Regulation Z treats such
open-end reverse mortgages with a line of credit as single advance,
single payment transactions for purposes of calculating the TALC).
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3. Supervision Program Developments
3.1 Recent Bureau Rules and Guidance
3.1.1 Small Entity Compliance Guide
On June 28, 2019, the Bureau updated the small entity compliance
guide summarizing the Payday Lending Rule's payment-related
requirements. The guide has been updated to incorporate the changes
that the Delay Final Rule made to the 2017 Payday Lending Rule.\31\
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\31\ There is currently a stay on the compliance date for the
2017 Payday Lending Rule.
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3.1.2 Memorandum of Understanding With the Federal Trade Commission
On February 26, 2019, the CFPB and the Federal Trade Commission
(FTC) announced a new memorandum of understanding (MOU) between the
agencies that went into effect on February 25, 2019.\32\ The MOU, which
facilitates cooperation and coordination on supervision, enforcement
and consumer response activities, renews a previous MOU between the
agencies, and is required by the CFPA.\33\
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\32\ The MOU can be found here: https://www.consumerfinance.gov/documents/7302/cfpb_ftc_memo-of-understanding_2019-02.pdf.
\33\ 12 U.S.C. 5514(c)(3)(A).
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3.1.3 Amendment to the Annual Privacy Notice Requirement Under the
Gramm-Leach-Bliley Act (Regulation P)
On August 10, 2018, the CFPB published a final rule to implement a
December 2015 statutory amendment to the Gramm-Leach-Bliley Act.\34\
The rule provides an exception under which financial institutions that
meet certain conditions are not required to provide annual privacy
notices to customers. To qualify for this exception, a financial
institution must not share nonpublic personal information about
customers except as described in certain statutory exceptions. In
addition, the rule requires that the financial institution must not
have changed its policies and practices with regard to disclosing
nonpublic personal information from those that the institution
disclosed in the most recent privacy notice it sent. As part of its
implementation, the Bureau is also amending Regulation P to provide
timing requirements for
[[Page 49255]]
delivery of annual privacy notices in the event that a financial
institution that qualified for this annual notice exception later
changes its policies or practices in such a way that it no longer
qualifies for the exception. The Bureau is also removing the Regulation
P provision that allows for use of the alternative delivery method for
annual privacy notices because the Bureau believes the alternative
delivery method will no longer be used in light of the annual notice
exception. The final rule went into effect on September 17, 2018.
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\34\ The final rule can be found here: https://www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/amendment-annual-privacy-notice-requirement-under-gramm-leach-bliley-act/.
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4. Conclusion
The Bureau will continue to publish Supervisory Highlights to aid
Bureau-supervised entities in their efforts to comply with Federal
consumer financial law. The report shares information regarding general
supervisory and examination findings (without identifying specific
institutions, except in the case of public enforcement actions),
communicates operational changes to the program, and provides a
convenient and easily accessible resource for information on the
Bureau's guidance documents.
5. Regulatory Requirements
This Supervisory Highlights summarizes existing requirements under
the law, summarizes findings made in the course of exercising the
Bureau's supervisory and enforcement authority, and 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 Supervisory Highlights 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.
Dated: September 12, 2019.
Kathleen L. Kraninger,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2019-20215 Filed 9-18-19; 8:45 am]
BILLING CODE 4810-AM-P
