The Consumer Financial Protection Bureau (CFPB) has historically provided an array of compliance resources including, compliance guides, instructional guides, executive summaries, factsheets, flow charts, checklists and FAQs.
Compliance Aids are essentially guidance, which in our post on Laws Vs. Regulations Vs. Guidance, we defined as “supplemental material published by an agency that helps clarify existing rules.”
Or, as the CFPB puts it, Compliance Aids are designed to “accurately summarize and illustrate the underlying rules and statutes” and “present the requirements of existing rules and statutes in a manner that is useful.” Compliance Aids aren’t rules, but might include “practical suggestions” for how it might be possible to comply with a rule or law.
Compliance Aids don’t have the force of law and aren’t binding. They are merely tools to help give FIs insights into how they might effectively comply. They also won’t necessarily cover every situation.
How is this different from previous guidance?
It doesn’t change the status of previous guidance and supporting materials, though some might be reissued as Compliance Aids.
What agencies are covered by Compliance Aids?
Compliance Aids only apply to the policies of the CFPB, not other regulators.
What role will they play in supervision?
The CFPB says that “regulated entities are not required to comply with the Compliance Aids themselves….only the underlying rules and statues.”
Financial institutions will still be free to decide the method they use to comply—even if it’s not addressed in a Compliance Aid—as long as it’s permitted by the applicable rules or laws.
“When exercising its enforcement and supervisory discretion, the Bureau does not intend to sanction, or ask a court to sanction, entities that reasonably rely on Compliance Aids.”
What is the CFPB’s goal for Compliance Aids?
The agency introduced compliance aids designation to help FIs and the publicby providing “greater clarity regarding the legal status and role of these materials.”
What does this mean for Fair Lending risk?
As we noted last year, the CFPB has been shifting its approachto Fair Lending supervision and enforcement to focus on preventing UDAAP and Fair Lending risks. The CFPB remains focused on student lending, mortgage lending, and small business lending. Redlining and HMDA continue to betop priorities.
Compliance Aids are an effort by the CFPB to help FIs understand regulatory expectations and best practices to prevent violations.
As Compliance Aids become available, consider reviewing the ones relevant to Fair Lending, UDAP, Redlining and HMDA to see if they align with your FI’s interpretation and policies.
You can also rely on NTrupoint to follow these developments and help you ensure your Fair Lending compliance efforts are up to par with tools and advice, including thisfree Fair Lending checklist.
At work, my goal is to create great relationships. In that spirit, I have really come to appreciate our company lunches. As the table expands, it symbolizes TRUPOINT's growth and the contributions made by each and every member of our team. Outside of work, my goal is to compete on the country club circuit, one Member-Guest at a time! As a native of Pinehurst, NC, you could say that I come by my love of the sport naturally.