The Consumer Financial Protection Bureau (“CFPB”) announced Tuesday that going forward the agency will provide more information in its Civil Investigative Demands (“CIDs”). The American Bankers Association and others had voiced concerns about the often vague and expansive scope of such demands in response to the Bureau’s 2018 Request for Information (“RFI”) seeking feedback on the CID process. The CFPB indicated that it will include more detail regarding the potentially wrongful conduct under investigation and the potentially applicable provisions of law that may have been violated in its CIDs. The Bureau also plans to “typically” specify the business activities subject to its authority or, in cases where determining its authority over the relevant activity is one of the purposes of the investigation, it may disclose that fact in the interests of transparency.
The CFPB said that it took into account recent court cases in making the CID policy change, likely in reference to the Fifth Circuit and D.C. Circuit court decisions striking down certain of the agency’s CIDs from 2017 for vagueness. The Bureau also observed that the policy change is in line with many of the comments it received in response to its 2018 RFI seeking feedback on the CID process.
Consistent with current CFPB Director Kathleen Kraninger’s first major speech since taking on the role in December of last year, the policy change should result in greater transparency and more clarity for industry participants when receiving CIDs from the CFPB. In addition, the policy change signals yet another departure from the CFPB’s practices under Richard Cordray – by specifically enumerating the basis of its authority in CIDs, the agency appears less likely to “push the envelope” on the scope of its jurisdiction under Director Kraninger.