Improving how the CFPB affects ALTA Members

Overview

ALTA has focused on improvements to the Consumer Financial Protection Bureau (CFPB or Bureau) in three areas that improve how CFPB affects ALTA members:

  1. a mechanism for the public to provide feedback on CFPB policy statements, guidance and bulletins;
  2. the use of advisory opinions to provide more specific guidance so that businesses can meet Bureau expectations in their daily business practices; and
  3. a Small Business Advisory Board, similar to advisory boards created for community banks and credit unions, with whom the Bureau also does not have regular contact.

Impact to the Industry

ALTA members discovered how valuable public input is to successful implementation of informal guidance after the Bureau published an April 2012 bulletin on third-party service providers. This bulletin was not directed at or intended for ALTA members, but produced serious unintended consequences for their businesses. The Bureau, consumers and industry would benefit from more public input on informal Bureau guidance.

Advisory opinions – The use of advisory opinions by the CFPB would enable businesses that design, operate, or maintain a consumer financial product or service to obtain more clear guidance from the Bureau as to whether a certain specified, prospective product or service is in compliance with federal consumer financial law. This improved certainty would prevent consumer harm and reduce costly guesses about how to comply with consumer financial law.

CFPB advisory opinions would help “covered persons” (individuals subject to CFPB rules, orders, guidance, interpretations, statements of policy, examinations, and enforcement actions) to receive guidance on whether a proposed design, operation or maintenance of consumer financial product or service would comply with federal consumer law.

Small business advisory board – The CFPB does not have supervisory authority regarding credit unions and depository institutions with total assets of $10 billion or less. Since it does not have regular contact with these institutions, the Bureau created a Community Bank Advisory Council and a Credit Union Advisory Council as a mechanism to ensure that their unique perspectives are shared with the Bureau. These advisory councils share information, analysis and recommendations to better inform CFPB policy development, rulemaking and engagement work.

Although non-banks can participate in one-time Small Business Regulatory Enforcement Fairness Act (SBREFA) panels, there is no standing body for these non-bank small businesses (like ALTA members) to share information, analysis and recommendations to better inform CFPB policy development, rulemaking and engagement work. The Bureau, consumers and industry would benefit from more public input from non-bank financial institutions, like real estate settlement providers.

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