Appleseed submits comments in support of CFPB’s Supervision Program

–As submitted to the CFPB–
May 21, 2018

Monica Jackson
Office of the Executive Secretary
Consumer Financial Protection Bureau 1700 G Street NW Washington, DC 20552

Re: Request for Information (“RFI”) Regarding the Bureau’s Supervision Program (Docket No. CFPB-2018-004)

Dear Ms. Jackson:

Appleseed submits these comments in response to the Consumer Financial Protection Bureau’s (CFPB’s) Request for Information (“RFI”) regarding the Bureau’s Supervision Program. We urge the CFPB not to weaken its supervision program, which is a critical part of the Bureau’s work. CFPB examinations have resulted in enormous benefits to millions of consumers across a number of markets, as well as improvements to the systems and operations of the companies in those markets.

Appleseed is a nonprofit network of 18 Centers dedicated to advancing justice and opportunities that help low-income people and working families build better lives.

Supervision is critical in order for the CFPB to fulfill its mission. It is a complementary tool to the Bureau’s enforcement program, and has the advantages of often being faster, less resource-intensive, and more flexible. Moreover, the Dodd-Frank Act makes clear that it is the CFPB, and not any other regulator, that has exclusive authority to supervise certain entities (i.e., banks with over $10 billion in assets) for consumer protection compliance. The Act is also clear that it requires the Bureau to supervise certain nonbank companies for the consumer protection compliance.

CFPB supervision has greatly improved compliance by supervised entities with consumer financial laws, to the advantage of millions of consumers who are customers or otherwise impacted by those companies. For example:

• In the consumer reporting marketing, CFPB supervision has forced credit bureaus to institute some much-needed fundamental reforms, such as establishing robust quality control programs and overseeing information furnishers to ensure they are meeting legal and compliance obligations.
• In the student loans servicing market, examiners halted unfair practices such as servicers declaring loans to be automatically in default when a co-signer died or declared bankruptcy where the loan contracts were ambiguous.
• CFPB supervision of mortgage servicers has resulted in hundreds of thousands of homeowners avoiding millions of dollars in improper charges, sometimes through something as simple as fixing a software flaw. CFPB examinations of the loss mitigation practices of servicers have led to substantial improvements, helping put homeowners in a better position to avoid foreclosures.
• In the debt collection market, examiners uncovered multiple violations of the Fair Debt Collection Practices Act and directed collectors to take remedial actions to address these violations. Violations included common practices that are often the subject of complaints, such as attempting to collect from authorized users who were not liable for credit card debts, impermissibly communicating with third parties about a debt, and communicating with consumers at inconvenient times.

Furthermore, the CFPB has been cautious and measured in determining which entities to supervise. It has defined a limited and appropriate set of “larger participants” in nonbank markets, such as debt collection, consumer reporting, student loan servicing, international money service transfer, and automobile finance companies. The Bureau should engage in rulemakings to similarly define larger participants in the prepaid account, installment loan, vehicle title lending, and financial data aggregator markets.

Finally, the CFPB should continue to issue its Supervisory Highlights reports. The reports provide valuable information, transparency, and guidance to consumers, the general public, the media, and industry itself.

Thank you for the opportunity to submit these comments. If you have any questions about them, please contact Annette LoVoi, Appleseed, Director of Financial Access and Asset Building, alovoi@appleseednetwork.org or 512.633.3535.