The CFPB issued an interim final rule governing investigations undertaken pursuant to section 1052 of the Dodd-Frank Act, which authorizes the Bureau to investigate whether persons have engaged in conduct that violates any provision of the federal consumer financial laws. The rule describes the Bureau’s policies and procedures that apply in a nonadjudicative setting and includes the CFPB’s authority to conduct investigations before instituting judicial or administrative adjudicatory proceedings under the federal consumer financial laws. The rights of persons from whom the Bureau seeks to compel information during an investigation are also addressed.
Under the rule, the CFPB is authorized to issue civil investigative demands for documentary material, tangible things, written reports or answers to questions, and oral testimony, all of which may be enforced in federal district court. The Bureau also has the authority to conduct investigations and hold investigative hearings. The rule also serves to protect those under investigation by requiring certain notifications of an investigation, setting forth procedures under which a petition for an order modifying or setting aside a civil investigative demand can be filed, providing a right to counsel, and setting forth the process for obtaining copies of, or access to, documents or testimony provided to the Bureau.
Practical Tip: Those familiar with the investigative rules of the banking regulators, and particularly those of the FTC, should find similarities in the CFPB’s procedures, because the Investigation Rule was based on section 20 of the FTC Act. In conducting an investigation, the Bureau must first advise the party being investigated of the nature of the conduct constituting the alleged violation under investigation and the applicable provisions of law. The Division of Enforcement may close an investigation when the facts of an investigation indicate an enforcement action is not necessary or warranted in the public interest.