Last Thursday, the CFPB released Version 1.0 of its Supervision and Examination Manual, the guide for its examiners to use in overseeing companies that provide consumer financial products and services. The examination manual consists of three separate parts: The first part describes the supervision and examination process. The second part contains examination procedures, including both general instructions and procedures for determining compliance with specific regulations. The third part presents templates for documenting information about supervised entities and the examination process, including examination reports.
As part of its release, the CFPB has also developed a list of Supervision and Examination Manual Q&A’s regarding the manual itself, including questions and answers on how the CFPB’s manual compares to examination manuals of other federal financial regulators, such as NCUA. In addition to the general guidance included within the manual on how the CFPB will conduct examinations and procedures to review the compliance management systems at both depository institutions and non-depository consumer financial companies, the Q&A states “The rest of the manual primarily consists of examination procedures that examiners at the other federal financial supervisory agencies use,” and “The majority of the manual is substantially similar to the consumer compliance manuals of other banking regulators.” The Q&A does mention the following differences, however, which have been included within the manual:
• A “Risk assessment” to be used by examiners to identify potential risks to consumers in the consumer financial products and services offered by supervised entities.
• “UDAAP” procedures to be used by examiners to identify “unfair, deceptive and abusive acts or practices.”
Also released, as part of the manual, the CFPB outlined its Mortgage Servicing Examination Procedures describing the types of information that the agency’s examiners will gather to evaluate mortgage servicers’ policies and procedures, assess whether servicers are in compliance with applicable laws, and identify risks to consumers in servicing operations.
While the CFPB has supervision, examination and enforcement authority over federally-insured credit unions (FICUs) with total assets over $10 billion, NCUA and the state regulators will generally retain the examination authority over FICUs with $10 billion or less in assets, and will have “exclusive” enforcement authority over those institutions. The CFPB has limited authorities for these smaller institutions including: (1) authority to accompany NCUA examiners “on a sampling basis;” (2) authority to require reports; and (3) authority to refer suspected violations to NCUA. The CFPB has stated that it will begin examining certain large depository institutions in the fourth quarter of 2011.