The Consumer Financial Protection Bureau (“CFPB”) recently announced that it may provide lenders with notice of the nature of the subject’s potential violation(s) before proceeding with enforcement actions. CFPB Bulletin 2011-04 states that its Office of Enforcement has discretion to provide notice and an opportunity to respond to the subject of an investigation. The CFPB may choose not to provide notice in certain circumstances, however, such as when time is of the essence or there are allegations of continuing fraud. A responding party’s submission cannot exceed 40 pages and must focus on legal and policy issues. Further, any factual assertion in the response must come from an individual with personal knowledge and be made under oath. Responding parties have 14 days to respond following receipt of the notice.
Raj Date, Special Advisor to the Secretary of the Treasury for the CFPB, stated, “The Early Warning Notice announced today strikes a balance between the goal of fairness to those being investigated and our mission to protect consumers.” The notice system is based on similar procedures used at other federal agencies, including the Security and Exchange Commission’s “Wells process.” This process will provide subjects with an opportunity to present their position before an enforcement action is recommended. The CFPB has not yet announced whether it will permit responding parties the opportunity to review evidence from the investigation or meet in-person with CFPB staff.
According to Mr. Date, the notice system “will help us fulfill our commitment to transparency in enforcing the law.”