CFPB Finalizes Non-Binding “No-Action Letter” Policy
On February 18, 2016, the Consumer Financial Protection Bureau (CFPB) finalized a policy that establishes a process for companies developing financial products to apply for a statement from the CFPB, known as a “no-action letter,” regarding the regulatory impact of the proposed product.
According to the CFPB, [t]he new policy was created as part of CFPB’s Project Catalyst initiative and is intended to enhance regulatory compliance in specific circumstances where a product holds the promise for significant consumer benefit and where there may be uncertainty around how the product fits within an existing regulatory scheme.” Pursuant to the policy, once a company submits an application to the CFPB, and the proposed product passes a review, the CFPB will issue a letter indicating that the CFPB reviewed the application and has no present intention to recommend enforcement or supervisory action with respect to the proposed product.
However, the no-action letters may have more bark than bite. The policy expressly states that no-action letters “would be non-binding on the Bureau, and would not bind courts or other actors who might challenge a [no-action letter] recipient’s product or service, such as other regulators or parties in litigation.” Further, although the policy contemplates that company submissions for a no-action letter may contain proprietary or confidential information, there is no guaranty that such information can or will be protected. In short, the CFPB no-action letter policy falls short of protecting innovative companies seeking regulatory approval of new products.
You can view the CFPB’s no-action letter policy here: http://files.consumerfinance.gov/f/201602_cfpb_no-action-letter-policy.pdf.
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Zane Gilmer is a member of the firm’s litigation practice group. His practice focuses on business litigation and compliance and he is a member of the firm’s CFPB taskforce. Zane works out of the firm’s Denver office and he can be reached at email@example.com or 303.376.8416.
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