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The Consumer Financial Protection Bureau on Wednesday rescinded seven policies that had been issued in 2020 to provide financial institutions with temporary flexibilities during the pandemic.
The rescinded policy statements had originally been issued last year from March 26 through June 3 and gave financial institutions flexibility regarding regulatory filings or compliance with consumer financial laws and regulations, including those related to mortgages, credit reporting, credit cards and prepaid cards.
“With the rescissions, the CFPB is providing notice that it intends to exercise the full scope of the supervisory and enforcement authority provided under the Dodd-Frank Act,” the CFPB said in a statement.
The CFPB noted that financial institutions have had a year to adapt to the difficulties posed by the pandemic. The policy changes, which were effective April 1, included guidance to help financial institutions comply with their legal and regulatory obligations.
“We are now over a year into the disruptive and deadly COVID-19 crisis. The virus has affected industry as well as consumers, but individuals and families have been hardest-hit by the pandemic’s health and economic impacts,” CFPB Acting Director Dave Uejio said in the statement. “Providing regulatory flexibility to companies should not come at the expense of consumers. Because many financial institutions have developed more robust remote capabilities and demonstrated improved operations, it is no longer prudent to maintain these flexibilities. The CFPB’s first priority, today and always, is protecting consumers from harm.”
One of the policies affected staffing and other challenges with resources that financial institutions faced. The CFPB will no longer consider these challenges when determining enforcement actions.
“To fulfill its statutory mandate, the Bureau has made it a priority to direct its supervisory, enforcement, and other tools to the prevention of harm to consumers from unlawful acts, policies, and practices,” the CFPB said in rescinding the policy. “It is therefore of critical importance that institutions adhere to consumer protection requirements, including fair lending laws, in their interactions with consumers, and that the Bureau use its supervisory and enforcement tools to the full extent and with the full flexibility afforded by Congress.”
The CFPB’s move also means mortgage lenders will no longer be able to skip quarterly reporting of Home Mortgage Disclosure Act (HMDA) data intended to provide transparency in residential lending. According to the CFPB, about half of the institutions subject to HMDA requirements have still been filing quarterly data.
Other rescinded policies had provided flexibility regarding credit reporting, electronic credit card disclosures, submitting information collected on credit card and pre-paid accounts, resolving Regulation Z billing errors and filing requirements under the Interstate Land Sales Full Disclosure Act.
The CFPB said it is also rescinded a 2018 bulletin on supervisory communications and replaced it with a revised bulletin describing its use of matters requiring attention (MRAs) to effectively convey supervisory expectations.
