CFPB Shifts Focus in Light of COVID-19

The Consumer Financial Protection Bureau (“CFPB”) hosted a webinar, led by Director Kathy Kraninger and Associate Director for Supervision, Enforcement, and Fair Lending Bryan Schneider, laying out its supervisory and enforcement priorities in light of COVID-19. These priorities will necessarily impact the CFPB's enforcement of the Fair Credit Reporting Act ("FCRA").  The CFPB stated it will conduct “prioritized assessments” focusing on consumers who are having trouble making loan payments and markets where Congress has provided special borrower protections under the CARES Act, including consumer reporting and furnishing and collections. The CFPB will also assess financial institutions’ implementation of the Paycheck Protection Program (“PPP”) for fair lending compliance.

As an example of a market with elevated pandemic-related risk, the CFPB focused on student loan servicing, noting the CFPB has authority to examine this market under its larger-participants rule. Prioritized assessments of student loan servicers will include servicing of private and federally-owned loans and will focus on (i) new repayment options available to borrowers; (ii) how these options are being communicated by servicers; and (iii) the operational risk of these programs. The CFPB will also examine student loan servicers compliance with the CARES Act amendments to FCRA and other furnishing compliance.

Prioritized assessments will also examine originations under the PPP, focusing on (i) steps taken by financial institutions to ensure programs comply with fair lending laws; (ii) steps taken by financial institutions to ensure compliance with adverse action notice requirements; and (iii) restrictions on PPP loans placed by institutions that go beyond the Small Business Administration’s (“SBA”) guidelines.

The CFPB’s goal with this shift in focus is two-fold – to ensure financial institutions are aware of practices that may cause consumers harm and to expand the agency’s supervisory ability to gain insight into industry responses to COVID-19. These prioritized assessments will be limited in time to the past few months and will be limited in scope to markets with elevated pandemic-related risk. Institutions for prioritized assessment will be identified by consumer complaints and news reports.

The CFPB has already begun sending these assessments, with more to follow, and will disclose its findings to the extent the confidentiality of the examinations allows.