On May 22, 2014, the Consumer Financial Protection Bureau (CFPB) issued its Spring 2014 Supervisory Highlights Report – its fourth such report since the agency’s founding. The report includes a review of recent rulemaking, guidance, and enforcement activity. The CFPB used its fourth report to focus on the importance of compliance management systems.  “In this fourth edition of Supervisory Highlights, the CFPB reiterates the importance of robust compliance management systems and shares recent supervisory observations, which include short-term, small dollar lending, consumer reporting, debt collection and fair lending,” the report states in its introduction.  Other report highlights include:

  • The agency’s nonpublic supervisory actions concerning consumer reporting, credit cards, mortgage originations and deposit products “resulted in more than $70 million in remediation to over 775,000 consumers.” 
  • The report reiterates the CFPB’s supervisory guidance for oversight of third-party service providers, a recent agency focus particularly in connection with mortgage servicing. 
  • The summarizes the CFPB’s observations on fair lending risk resulting from inadequate compliance management systems, particularly with handling lender exceptions to standard underwriting criteria. The report notes  that “financial institutions lack adequate policies and procedures for managing the fair lending risk that may arise when a lender makes exceptions to its established credit standards.”  At the same time, the report recognizes the importance of access to credit and the use of exceptions to further that goal.
  • The report summarizes supervisory findings at non-banks, largely focusing on debt collection, consumer reporting, and payday lending.

As with prior Supervisory Highlight reports, the 2014 Spring edition provides insight into the agency’s supervisory and enforcement priorities, and adequately summarizes recent rulemaking and guidance.