Summary: CFPB Supervisory Appeals Process 12 CFR Chapter X

Summary re: CFPB Supervisory Appeals Process
12 CFR Chapter X

The Consumer Financial Protection Bureau (CFPB) is updating its internal supervisory appeals process for institutions seeking to appeal a compliance rating or an adverse material finding.

The revised supervisory appeals process is applicable as of February 22, 2024. The update document can be found here.

Summary

The Bureau is revising its supervisory process to broaden the Bureau officials eligible to evaluate appealed matters, the options resolving an appeal and the matters subject to appeal.  The primary changes are:

  • The revised process broadens the pool of potential members of the appeals committee (beyond the Supervision managers) to include any CFPB manager who did not participate in the underlying matter being appealed and who has relevant expertise on the issue(s) raised by the appeal.
  • The Supervision Director will select three CFPB managers who meet the criteria to serve on the appeals committee, which will advise the Supervision Director on how to resolve the appeal. The CFPB’s General Counsel will designate the legal counsel to advise the committee.
  • Under the revised process, there is a new option for resolving the appeal, which is remanding the matter to Supervision staff for consideration of a modified finding, in addition to the existing options of upholding or rescinding the finding.
  • Under the revised process, institutions may file an appeal any compliance rating issued to the institution, not only an adverse rating.
  • The revised process includes additional clarifying changes and specifies that it applies to appeals pending on the date it is published.

Appeals of Supervisory Matters

Supervised entities have the ability to appeal final examination or targeted review findings.  The appeal must be made within 30 business days of receipt of the final examination report. An entity may only appeal a finding once.

The appeal must be in writing and submitted to the CFPB via email at [email protected]. The appeal request must include:

  • A description of the issues in dispute and appropriate supporting information
  • A summary of informal efforts made to resolve the dispute with examiners or other CFPB Supervision staff;
  • A copy of a board resolution or other appropriate formal document issued by the entity’s board of directors or principal(s), which authorizes the filing of an appeal; and
  • A statement of whether or not the entity’s board of directors or principal(s) requests, a member of the board or principal must participate in and lead the oral presentation.

An entity may not use this supervisory appeals process to appeal:

  • Preliminary supervisory matters (including preliminary findings);
  • CFPB examiners’ decisions to initiate supervisory measures, such as memoranda of understanding;
  • Enforcement-related actions and decisions, including cease and desist orders and determinations to proceed with an investigation or public enforcement action;
  • Adverse findings or an unsatisfactory rating contained in a supervisory letter or examination report related to a recommended or pending investigation or public enforcement action; or
  • Referrals of information to other law enforcement and regulatory agencies.

Appeal Decisioning

Within five business days of receipt of an appeal, the Supervision Director will designate a committee composed of three CFPB managers who were not involved in the supervisory matter being appealed and who have relevant experience on the issue raised by the appeal.  The General Counsel will designate legal counsel to advise the committee.  The committee will:

  • Review the supervised entity’s written appeal, the examination report or supervisory letter at issue, and supporting documentation for both;
  • If applicable, send a copy of the appeal to the prudential regulator of the appealing entity and solicit its views;
  • Solicit input from other CFPB personnel, such as examination staff and CFPB Headquarters staff (including those involved in the specific matter under appeal) and
  • Hear a presentation from the appealing entity, if requested.

Upon conclusion of the review, the committee will advise the Supervision Director in formulating a written decision on the appeal.  The decision may uphold or rescind the finding.  Alternatively, the decision may remand the finding to Supervision staff who will consider a modified finding.

The CFPB expects that a decision will be issued within 60 business days from the assignment of the appeal to the committee, but the committee will notify the supervised entity by email if a longer period is needed.

Confidentiality

The appeals process will be confidential and submissions by supervised entities will be treated in accordance with the CFPB regulations and guidance on confidential supervisory information.  The CFPB may in the future publish summaries of issues raised in appeals, and the outcomes, in a manner that will protect from disclosure the identity of the appealing entity and any other confidential information.

Effect on the Supervisory Relationship

The CFPB encourages an open dialogue with its supervised entities and views appeals, as one aspect of such dialogue.  The CFPB will take measures to ensure that an entity’s filing of an appeal does not have a negative effect on its supervisory relationship with the CFPB.