The CFPB ("Bureau") rescinded its "January 2020 Statement of Policy Regarding Prohibition on Abusive Acts or Practices" in supervision and enforcement.

The policy provided "a framework for the Bureau's exercise of its supervisory and enforcement authority to address abusive acts or practices." (See related coverage.) The Bureau determined that the policy fails to provide clarity to regulated entities and is "counterproductive."

The Bureau gave the following reasons, among others, for rescinding the policy:

  • declining to seek civil money penalties and disgorgement runs contrary to the CFPB's current priority of achieving deterrence through penalties;
  • the statement's principle of "making a good-faith effort to comply with the abusiveness standard" affords the CFPB "considerable discretion" and adds uncertainty to market participants; and
  • not asserting abusiveness claims solely because of the overlap with unfair conduct slows the clarification of the statutory abusiveness standard because the CFPB must articulate abusiveness claims and ensure the issuance of judicial and administrative decisions.

The Bureau stated that it will consider good faith, company size and all other factors it typically considers in prosecutorial discretion, but intends to exercise its supervisory and enforcement authority consistent with the full scope of its statutory authority under the Dodd-Frank Act.

Commentary

Today's action to rescind the Abusiveness Policy Statement represents yet another rollback of the prior administration's policies and is consistent with the CFPB's more aggressive enforcement posture under the Biden administration.

Primary Sources

  1. CFPB Press Release: Consumer Financial Protection Bureau Rescinds Abusiveness Policy Statement to Better Protect Consumers
  2. CFPB Rescission of Policy Statement: Statement of Policy regarding Prohibition on Abusive Acts or Practices; Rescission

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