May Regulatory Compliance Briefing

The May Regulatory Compliance Briefing includes recent alerts, advisories, and pending actions to be aware of this month.

Recap of May Compliance Alerts

Consumer Financial Protection Bureau (CFPB)

CA-200 CFPB Interim Final Rule to Facilitate LIBOR Transition 

• Rule/Action Final: April 28, 2023 
• Effective Date: May 15, 2023 
• Alert Date: May 5, 2023 

Additional Advisories and Announcements

The selected advisories and/or announcements below provide information that may be helpful to your organization but were not included as compliance alerts because they do not contain any regulatory changes.

Consumer Financial Protection Bureau (CFPB)

CFPB Statement of Policy on Prohibition on Abusive Acts and Practices

On April 3, 2023, the CFPB issued a policy statement regarding the Consumer Financial Protection Act of 2010 prohibition on abusive acts or practices. The Policy Statement summarizes enforcement actions that have been taken by the CFPB and other enforcement agencies and explains how the CFPB analyzes the elements of abusiveness through relevant examples. The Policy Statement indicates that there are two categories of conduct the CFPB finds generally abusive: (1) obscuring important features of a product or service, and (2) leveraging certain circumstances to take an unreasonable advantage. The Policy Statement provides some examples for analyzing whether particular practices may be abusive. However, the CFPB has maintained broad interpretive discretion as to what constitutes an abusive act or practice.

CFPB Revised Methodology for Determining Average Prime Offer Rates 

On April 14, 2023, the CFPB announced a revised version of its “Methodology for Determining Average Prime Offer Rates.” The revised methodology describes the calculations used to determine average prime offer rates (APOR) for purposes of federal mortgage rules. The methodology statement has been revised to address the upcoming unavailability of certain data the CFPB previously relied on to calculate APORs. On or after April 21, 2023, the CFPB will begin using ICE Mortgage Technology data and the CFPB’s revised methodology to calculate APORs. The CFPB will continue to post the survey data used to calculate APORs on the FFIEC website. 

CFPB Advisory Opinion Related to Time-Barred Debts 

On April 26, 2023, the CFPB issued an Advisory Opinion affirming that the FDCPA and Regulation F prohibit FDCPA-covered debt collectors from suing or threatening to sue to collect a time-barred debt.  And accordingly, a debt collector who brings or threatens to bring a State court foreclosure action to collect a time-barred mortgage debt may violate the FDCPA and Regulation F. 

Federal Deposit Insurance Corporation (FDIC)

FDIC Consumer Compliance Supervisory Highlights

On April 5, 2023, the FDIC issued Financial Institution Letter FIL-13-2023, announcing the publication of its Consumer Compliance Supervisory Highlights. The publication provides an overview of consumer compliance issues identified through the FDIC’s supervision of state non-member banks and thrifts in 2022. The publication discusses examination observations related to RESPA Section 8, FCRA Trigger Leads, SCRA and application of excess interest payments, and Fair Lending. The publication also discusses regulatory developments, resources for financial institutions, and consumer complaint trends.  

FDIC Guidance to Help Financial Institutions and Facilitate Recovery in Areas of Arkansas Affected by Severe Storms and Tornadoes

On April 5, 2023, the FDIC issued FIL-14-2023, announcing a series of steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Arkansas affected by severe storms and tornadoes.

FDIC Guidance to Help Financial Institutions and Facilitate Recovery in Areas of California Affected by Severe Winter Storms, Straight-Line Winds, Flooding, Landslides, and Mudslides

On April 13, 2023, the FDIC issued FIL-15-2023, announcing a series of steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of California affected by severe winter storms, straight-line winds, flooding, landslides, and mudslides. 

FDIC Guidance to Help Financial Institutions and Facilitate Recovery in Areas of Tennessee Affected by Severe Storms, Straight-Line Winds, and Tornadoes 

On April 13, 2023, the FDIC issued FIL-16-2023, announcing a series of steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Tennessee affected by severe storms, straight-line winds, and tornadoes.

FDIC Guidance to Help Financial Institutions and Facilitate Recovery in Areas of Indiana Affected by Severe Storms, Straight-Line Winds, and Tornadoes

On April 24, 2023, the FDIC issued FIL-18-2023, announcing a series of steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Indiana affected by severe storms, straight-line winds, and tornadoes. 

FDIC Supervisory Guidance on Charging Overdraft Fees for Authorize Positive, Settle Negative Transactions 

On April 26, 2023, the FDIC issued Financial Institution Letter FIL-19-2023, enclosing Supervisory Guidance on Charging Overdraft Fees for Authorize Positive, Settle Negative Transactions. The Guidance expands on the FDIC’s 2019 Supervisory Highlights article titled “Overdraft Programs: Debit Card Holds and Transaction Processing” by discussing the FDIC’s concerns with both the available and ledger balance methods used by institutions when assessing overdraft fees. The Guidance indicates that failure to take steps to avoid assessing overdraft-related fees when transactions are authorized on positive balances but settle on negative balances results in heightened risks of violations of the Dodd-Frank Act and FTC Act UDAAP prohibitions, and the Guidance also clarifies that disclosures describing transaction processing may not mitigate these concerns.

FDIC Guidance to Help Financial Institutions and Facilitate Recovery in Areas of Oklahoma Affected by Severe Storms, Straight-line Winds, and Tornadoes

On April 28, 2023, the FDIC issued FIL-22-2023, announcing a series of steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Oklahoma affected by severe storms, straight-line winds, and tornadoes.

Joint Statements

Interagency Policy Statement on Allowances for Credit Losses

On April 21, 2023, the FDIC, NCUA, OCC, and FRB made technical changes to the “Interagency Policy Statement on Allowances for Credit Losses” to reflect the March 2022 amendments made by the FASB. On March 31, 2022, the FASB issued Accounting Standards Update No. 2022-02 (ASU 2022-02), “Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.” ASU 2022-02 eliminated the recognition and measurement guidance for TDRs for all institutions that have adopted the CECL methodology. The changes made to the “Interagency Policy Statement on Allowances for Credit Losses” remove the references to TDRs. 

Joint Statement on Enforcement Efforts Against Discrimination and Bias in Automated Systems 

On April 25, 2023, the CFPB, USDOJ, EEOC, and FTC issued a Joint Statement about enforcement efforts related to bias in automated systems and artificial intelligence.  The Joint Statement focuses on automated systems’ “potential to perpetuate unlawful bias, automate unlawful discrimination, and produce other harmful outcomes.” The Joint Statement also includes a description of each agency’s authority to combat discrimination and identifies pronouncements from each agency related to automated systems. 

Joint Statement on Completing the LIBOR Transition

On April 26, 2023, the CFPB, FDIC, FRB, OCC, and NCUA issued a Joint Statement to remind supervised institutions that U.S. dollar London Inter-Bank Offered Rate (LIBOR) panels will end on June 30, 2023. The Joint Statement reiterates the agencies’ expectations that institutions with LIBOR exposure should complete their transition of remaining LIBOR contracts as soon as practicable, and that failure to adequately prepare for LIBOR’s discontinuance could undermine financial stability and institutions’ safety and soundness and create litigation, operational, and consumer protection risks.

Future & Pending Regulatory Actions and Compliance Alerts

Financial Crimes Enforcement Network (FinCEN)

• FinCEN Advance Notice of Proposed Rulemaking to address the vulnerability of the U.S. real estate market to money laundering and other illicit activity — public comment period ended February 14, 2022.
• FinCEN Pilot Program for SARs Sharing proposed rule — public comment period ended March 28, 2022.
• FinCEN Proposed Phase II Beneficial Ownership Rule — public comment period ended February 14, 2023.

Consumer Financial Protection Bureau (CFPB)

• CFPB Notice and Request for Comment Regarding the CFPB’s Inquiry Into Buy-Now-Pay-Later (BNPL) Providers — public comment period ended on March 25, 2022.
• CFPB Proposed Rule on Credit Card Late Fees – public comment period ended on April 3, 2023.

Federal Deposit Insurance Corporation (FDIC)

• FDIC Climate Risk Principles — public comment period ended on June 1, 2022.

National Credit Union Administration (NCUA)

• NCUA rulemaking to modernize and improve the NCUA’s investment rule and to provide regulatory relief was expected in September 2022.
• NCUA Proposed Amendments to FCU Bylaws related to member expulsion — public comment period ended on December 2, 2022.
• NCUA Proposed Financial Innovation Rule — public comment period ended on February 28, 2023.
• NCUA Proposed Field of Membership Rule – public comment period ends on May 30, 2023.

Interagency Proposed Rules

• OCC, NCUA, FDIC, FRB — Joint, proposed rulemaking regarding their uniform rules and procedures for administrative hearings. The public comment period ended on June 13, 2022.
• OCC, FRB, FDIC, NCUA, FHFA, and CFPB — Rulemaking to implement quality control standards for the use of automated valuation models by mortgage originators and secondary market issuers. Notice of Proposed Rulemaking was expected in October 2022.

Stay on Top of Compliance Changes

For access to the complete analysis, executive summaries, and actions needed to ensure compliance, contact us.