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Following the implementation of its Nonbank Supervision Program (click here to read our alert on the program), the Consumer Financial Protection Bureau (CFPB) entered into a memorandum of understanding Jan. 20, 2012, with the Federal Trade Commission (FTC) clarifying the agencies' respective roles and responsibilities in protecting consumers in the financial products and services marketplace.
An independent agency with the authority to implement and enforce federal consumer financial law, the CFPB will focus its efforts, according to director Richard Cordray, on "nonbank" financial companies, including mortgage lenders, originators, brokers and servicers, loan modification and foreclosure relief services, payday lenders and private education lenders, as well as debt collection, consumer reporting, auto financing and money services businesses, all of which have historically fallen outside the authority of federal regulators and consumer protection agencies.
In the memorandum of understanding, the CFPB and FTC agreed, among other things:
Significantly, the two agencies agreed to avoid bringing separate administrative and/or civil actions against the same companies for alleged violations of consumer financial laws, "except in unusual circumstances," and to refrain altogether from bringing these actions while a similar action by the other agency is pending.
This client alert is a publication of Loeb & Loeb LLP and is intended to provide information on recent legal developments. This client alert does not create or continue an attorney client relationship nor should it be construed as legal advice or an opinion on specific situations.
Circular 230 Disclosure: To assure compliance with Treasury Department rules governing tax practice, we inform you that any advice (including in any attachment) (1) was not written and is not intended to be used, and cannot be used, for the purpose of avoiding any federal tax penalty that may be imposed on the taxpayer, and (2) may not be used in connection with promoting, marketing or recommending to another person any transaction or matter addressed herein.
An independent agency with the authority to implement and enforce federal consumer financial law, the CFPB will focus its efforts, according to director Richard Cordray, on "nonbank" financial companies, including mortgage lenders, originators, brokers and servicers, loan modification and foreclosure relief services, payday lenders and private education lenders, as well as debt collection, consumer reporting, auto financing and money services businesses, all of which have historically fallen outside the authority of federal regulators and consumer protection agencies.
In the memorandum of understanding, the CFPB and FTC agreed, among other things:
- To coordinate law enforcement activities, including conducting joint investigations, as well as engaging in joint training and sharing materials and resources;
- To check with the other agency - before commencing an investigation - to determine whether any investigations, actions or proceedings, or orders or judgments have already been instituted or obtained against an entity, to avoid duplicative efforts;
- To provide the other agency with a list of orders and judgments secured in a court proceeding or administrative proceedings against covered financial products and services companies, and to update these lists quarterly;
- To work together to establish a secure computerized system that each party can use to search for investigations, proceedings, orders and judgments against covered financial products and services companies;
- To provide the other agency with notice prior to initiating or settling suits or proceedings;
- To provide notice prior to intervening in a suit or proceeding;
- To consult and coordinate on rulemaking and guidelines;
- To share information on financial products and services companies obtained through examination or investigation; and
- To coordinate their efforts related to consumer complaints and education.
Significantly, the two agencies agreed to avoid bringing separate administrative and/or civil actions against the same companies for alleged violations of consumer financial laws, "except in unusual circumstances," and to refrain altogether from bringing these actions while a similar action by the other agency is pending.
This client alert is a publication of Loeb & Loeb LLP and is intended to provide information on recent legal developments. This client alert does not create or continue an attorney client relationship nor should it be construed as legal advice or an opinion on specific situations.
Circular 230 Disclosure: To assure compliance with Treasury Department rules governing tax practice, we inform you that any advice (including in any attachment) (1) was not written and is not intended to be used, and cannot be used, for the purpose of avoiding any federal tax penalty that may be imposed on the taxpayer, and (2) may not be used in connection with promoting, marketing or recommending to another person any transaction or matter addressed herein.