The Consumer Financial Protection Bureau (CFPB) took the first step toward the introduction of no-action letters (NALs) when it issued a proposed plan Oct. 10.
The proposal says the NALs would inform the recipient that the CFPB has no intention at the time of issuance to start an enforcement or supervisory action against the company in the specific matter. The NAL would be subject to modification or revocation at any time, though, and “may be conditioned on particular undertakings by the applicant with respect to product or service usage and data-sharing with the bureau. NALs also would be publicly disclosed and non-binding, either on the bureau or in court.
“The proposed policy would not be a waiver of any law or regulation,” the CFPB said on its blog announcing the move, “and it doesn’t give a requesting entity an exemption from complying with any statutory or regulatory rules. It also would not spell out our official interpretation of a statutory or regulatory requirement.”
The proposal will be published in the Federal Register and written comments are encouraged within 60 days after publication. The idea would create a structure for the CFPB to issues letters to applicants when regulations involving “innovative financial products or services” are created and there is “substantial uncertainty” whether or how specifically those regulations or statues would be applied.
The applicant would be required to “thoroughly demonstrate” the characteristics of the proposed product, how it would work and what consumer risks are involved. NALs only would be issued for products that could provide significant consumer benefits, so applicants would need to explain what regulatory uncertain exists that affects the product, and how it would interfere with the product development.
“We anticipate that no-action letters would be issued infrequently, and they would be issued at our sole discretion,” the blog said, “only after the applicant makes a thorough and persuasive demonstration that all the policy’s criteria, including the likely provision of consumer benefit, are met.”
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