As noted in previous updates, the Consumer Financial Protection Bureau (CFPB), which has been conducting examinations of regulated entities pursuant to the Dodd-Frank Act, has had attorneys from its enforcement division participate in supervisory examinations of regulated entities. This integration of the enforcement and supervisory functions has worried regulated entities as it raised concerns regarding, among other issues, the attorney-client privilege and the possibility that information shared during the supervisory examination would be utilized in later enforcement proceedings. A November 2012 annual report from the CFPB’s Ombudsman recognized this concern and recommended that "the CFPB establish ways to clarify the Enforcement Attorney role in practice at the supervisory examination." The report concluded that "the Ombudsman understands that the CFPB now is considering these recent recommendations."
In further recognition of the tension that arises when enforcement attorneys are present during supervisory examinations, the Federal Reserve’s Office of the Inspector General (OIG) has indicated that it plans to review the CFPB’s “integration of enforcement attorneys” into its supervisory examinations of banking and nonbanking institutions’ compliance with consumer protection laws and regulations. During the second quarter of 2013, the OIG intends to evaluate the CFPB’s integration of enforcement attorneys into examinations by assessing “(1) the potential risks associated with this examination approach and (2) the effectiveness of any safeguards that the CFPB has adopted to mitigate the potential risks associated with this examination approach.”
Despite these concerns, it is apparent from a Feb. 14, 2013 letter to the CFPB from the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness that enforcement attorneys continue to attend some supervisory examinations although it is not clear how that determination is made. Consequently, regulated entities must remain extra vigilant when CFPB enforcement attorneys show up at their door as part of an examination team.