Today, the CFPB released the CFPB Supervision and Examination Manual, the guide for our examiners to use in overseeing companies that provide consumer financial products and services.
Federal government regulators usually have manuals for their examiners. Our manual provides our examiners with direction on how to determine if providers of consumer financial products and services are complying with consumer protection laws – and how to determine if the providers have adequate policies and procedures in place to comply with those laws.
For example, it incorporates examination procedures long used by other federal regulators to check for compliance with laws like the Truth in Lending Act. The manual also helps ensure that we are applying the law consistently across everyone that we supervise.
Among other things, we will look at sales and marketing materials and disclosures given to consumers. We will review whether required information is presented in a clear and conspicuous manner in advertisements consistent with applicable law. And, we will review whether the required information in account disclosures, such as costs to the consumer, is accurate and consistent with applicable law.
In addition to the manual, the CFPB also released its examination procedures for mortgage servicing today. Over the coming weeks and months we will release more guides like the mortgage servicing one that explain specific examination procedures organized by product and line of business.
The CFPB is making the general exam manual and servicing procedures public so that financial services providers know what to expect during their examinations, and so that the public knows how we are fulfilling our responsibilities. We want to build a constructive relationship with the companies we supervise, and we understand the importance of establishing expectations up-front. To this end, we sent a letter this week to the banks, thrifts, and credit unions we will be supervising, letting them know we issued these documents.
We will use the manual initially to examine the more than 100 “large” banks, thrifts, and credit unions, as well as their affiliates, that are subject to CFPB supervision. These insured depository institutions are defined as large when they have total assets over $10 billion. They control the majority of bank assets in the country and interact with the majority of consumers.
The CFPB will examine the largest of the large banks on a continuing basis. We will examine other banks periodically. When we are ready, our examiners will also use this manual as a tool to look at other providers of consumer financial products and services that are not depository institutions, such as mortgage lenders, payday lenders, and private education lenders. Our goal is to help promote fair, transparent, and competitive consumer financial markets where consumers can have access to credit and other products and services, and where providers can compete for their business on a level playing field where everyone has to play by the rules.
As we continue to stand-up the CFPB and bring on more expert examiners and staff, we will focus our efforts where consumers are most at risk and where our oversight will have the greatest impact.
We consider the manual an evolving document and we welcome feedback from industry representatives and participants, consumer groups, and members of the public. And, of course, we will inform you about our supervision progress on a regular basis.