CFPB Adopts Privilege Waiver Rule As Originally Proposed

by Ballard Spahr LLP
Contact

[author: Keith R. Fisher]

The Consumer Financial Protection Bureau has promulgated a final rule on non-waiver of attorney-client privilege and work product protection for information voluntarily or involuntarily submitted by a regulated entity to the CFPB in situations where it subsequently shares that information with another federal or state agency.

The rule, Confidential Treatment of Privileged Information, was adopted on June 28, 2012, exactly as originally proposed and previously described on our blog, CFPB Monitor. The final rule’s privilege preservation regime applies only to waivers for information finding its way into the hands of third parties—such as other federal or state agencies, including state attorneys general—and does not purport to preserve the privilege vis-à-vis the CFPB.

The final rule builds upon ground staked out by the agency early in January in its Bulletin 12-01, which figures prominently in the CFPB’s explanation of the final rule. Both claim unfettered access to the records of regulated entities and assert that the information so obtained would not be subject to waiver of attorney-client privilege (other than vis-à-vis the CFPB).

Whereas Bulletin 12-01 took more of a “carrot and stick” approach—hinting at enforcement action against recalcitrant banks while articulating a positive tone relating to preservation of privilege for their confidential documents—the discussion accompanying the final rule eschews saber-rattling in favor of matter-of-fact statements that the CFPB, like the bank regulators, has inherent power to gain access to privileged documents.

By its terms, Bulletin 12-01 applied only to depository institutions subject to the CFPB’s jurisdiction (those with more than $10 billion in assets). It asserted that, notwithstanding the regulated entity’s waiver of attorney-client privilege as regards the CFPB, banks should be comfortable turning over privileged information to CFPB examiners because the privilege would not be waived as to any other federal or state regulatory or law enforcement agency (including state attorneys general) with which the Bureau might share the privileged information.

The final rule applies more broadly and encompasses all nonbank entities subject to CFPB authority. In addition, the CFPB takes the position that, to the extent that depository institutions with less than $10 billion in assets submit privileged information (coerced or voluntarily) to the CFPB in the course of its supervisory or regulatory processes, the rule applies likewise to them and shields the information produced from privilege waiver.

According to the CFPB, the purpose of the rule is to “provide maximum assurances of confidentiality to the entities subject to its supervisory or regulatory authority” and to forestall “any claim, in Federal or State court, that a person has waived any applicable privilege, including the privilege for attorney work product, by providing such information to the Bureau in the exercise of its supervisory or regulatory processes.”

In the final rule, the CFPB also notes that compliance with federal consumer financial law is served by policies that “do not discourage those subject to its supervisory or regulatory authority from seeking the advice of counsel.” Thus the release underscores the CFPB’s policy of seeking privileged information “only when it determines that such information is material to its supervisory objectives and that it cannot practicably obtain the same information from non-privileged sources.”

Moreover, the CFPB will, as also noted in the Bulletin, “give due consideration to supervised institutions’ requests to limit the form and scope of any supervisory request for privileged information.”

Ballard Spahr’s Consumer Financial Services Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws throughout the country, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs). The group includes the firm’s Bank Regulation and Supervision Group and its Mortgage Banking Group, which combine broad regulatory experience assisting clients in both the banking and residential and commercial mortgage industries with formidable skill in litigation and depth in enforcement actions and transactions.

The CFS Group also produces the CFPB Monitor, a blog that focuses exclusively on important CFPB developments. To subscribe to the blog, use the link provided to the right.

For more information, please contact CFS Practice Leader Alan S. Kaplinsky at 215.864.8544 or kaplinsky@ballardspahr.com, Mortgage Banking Practice Leader Richard J. Andreano, Jr., at 202.661.2271 or andreanor@ballardspahr.com, or Keith R. Fisher at 202.661.2284 or fisherk@ballardspahr.com.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ballard Spahr LLP | Attorney Advertising

Written by:

Ballard Spahr LLP
Contact
more
less

Ballard Spahr LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.