Under the Dodd-Frank Act, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) share some responsibilities, such as enforcing the Fair Debt Collection Practices Act. To provide consistency and prevent duplication in their regulatory efforts, the agencies renewed their memorandum of understanding (Memo) on March 6.
The Memo extends the terms of the agencies’ previous understanding, which expired on Jan. 20, but contains a few modifications.
For instance, the language of the Memo defining “confidential supervisory information” (CSI) has been amended. The previous definition was “any information the CFPB collects through its supervision of [a covered person].” The Memo now includes “or any other information as defined by 12 C.F.R. § 1070.2(i).” The CFPB had issued a guidance document on CSI on Feb. 6, in which the CFPB clarified that non-disclosure agreements among parties do not shield information from the agency’s regulatory reach.
The Memo’s definition of “consumer financial laws” also was amended to include “the Military Lending Act, 10 U.S.C. § 987.” In 2013, in amendments to the Military Lending Act enacted by Congress, the CFPB was given specific authority to enforce the act.
Additionally, the language “to determine which non-depository persons in certain markets are subject to supervision for compliance with federal consumer laws” was omitted from the revised Memo; but the language of the Memo still includes the following: “Whereas, the [Consumer Financial Protection] Act requires, under Section 1024(a)(2) of the CFP Act, that the CFPB consult with the FTC prior to issuing a rule under Section 1024(a)(1)(B).”
The CPF Act is Title X of the Dodd-Frank Act, which establishes the CFPB and its powers. Section 1024(a)(1)(B) of the Dodd-Frank Act addresses the CFPB’s ability to supervise larger participants as defined by the CFPB’s through its rulemaking powers.
The omission from the Memo would allow the CFPB to consult with the FTC on a wider range of issues prior to issuing rules under this section.
There were additional revisions within the new Memo, but most of them were to make minor clarifications (such as changing “will confer” to “will meet”) and eliminate sections that no longer are applicable. For example, the previous memo contained a section that required the CFPB and FTC to work toward developing a “secure computerized system” so that the agencies could consult one another prior to initiating investigations. This section was eliminated because that system has been developed.
The agencies still will meet quarterly to discuss “enforcement activities and how they can coordinate and cooperate effectively in those activities” but now these meetings will include their other required discussions on consumer and business education and outreach efforts, as well as their consumer education efforts for military service members and older Americans.
Under the agencies’ agreement regarding consumer complaints, the Memo eliminated the requirement that the “parties shall meet (within the next two years) and discuss what changes, if any, should be made to the procedures and processes.”
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