A First Look at the CFPB's Regulatory Writing; NAFCU Letter

Written by Steve Van Beek

Last Thursday, the CFPB issued a Notice and Request for Comment on "Defining Larger Participants in Certain Consumer Financial Products and Services Markets."  This is the first glance that folks have had, outside of the "Know Before You Owe" project, to get a feel for the CFPB's regulatory writing style.  

I know it is early, but I think the CFPB stepped up and wrote this Notice and Request for Comment in a relatively clear manner given the subject matter.  I don't want to get into the details of this Notice now, but I did want to point out a few areas where the CFPB laid out information in a more reader-friendly manner.  If there is one thing compliance officers need, it is regulatory language that is easier to read and understand.  And, perhaps, fewer regulations changing/finalizing at the same time.  

Here are couple of areas I think the CFPB took steps in the right direction:

1. Use of Headings and Subheadings.  The CFPB's Notice contains clear headings indicating which areas will be discussed.  I wish the Federal Reserve would have used similar detailed headings when implementing the Credit CARD Act provisions into Regulation Z. 
2. Requests for Comment. The CFPB did a good job of clearly indicating which areas it requested comments by including this language "The CFPB seeks public comment on the following:".  The CFPB also included specific questions for commenters which should produce better comments from the public and focus the discussion.    
3. Using Numbering.  While this may seem like a small detail, it can help when trying to determine which products are covered by a particular regulation.  Here is one example:

"Section 1024 specifically grants the CFPB authority to supervise, regardless of size, covered persons that offer or provide to consumers the following enumerated consumer financial products or services: (1) origination, brokerage, or servicing of residential mortgage loans secured by real estate, and related mortgage loan modification or foreclosure relief services; (2) private education loans; and (3) payday loans."  

Last Monday, I blogged about how credit unions would need to learn how to read regulations written by a new regulator.   While this is only the first glance at the CFPB's regulatory writing, it is promising that the CFPB is putting an emphasis on writing clearly.  

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NAFCU has consistently argued that currently under-regulated nondepository institutions should have been the focus of the CFPB to protect consumers, rather than adding an additional regulator to credit unions.  On Friday, NAFCU sent a letter to Professor Warren supporting the regulation of these nondepository institutions.