The CFPB has finalized its policy for exempting individual companies, on a case-by-case basis, from applicable federal disclosure requirements to allow those companies to test trial disclosures. The final policy encourages “banks, thrifts, credit unions, and other financial services companies to innovate by proposing and conducting [trial disclosure] programs.”
In issuing the policy, the CFPB relies on its authority under Dodd-Frank Section 1032(e) to permit providers of consumer financial services and products “to conduct a trial program that is limited in time and scope, subject to specified standards and procedures, for the purpose of providing trial disclosures to consumers.” To encourage participation in such programs, Section 1032(e) allows the CFPB to “establish a limited period during which a trial disclosure program shall be deemed to be in compliance with, or exempted from, a requirement of a rule or an enumerated consumer law.”
The final policy, which will be effective upon publication in the Federal Register, has four sections that address: (1) requirements for a proposed trial disclosure program to be considered eligible for a temporary waiver from disclosure requirements, (2) factors the CFPB may consider in deciding which programs to approve for a waiver, (3) the CFPB’s procedures for issuing waivers, and (4) the CFPB’s s disclosure of information on trial programs.
Responding to comments received on its proposed policy, the CFPB clarified in the final policy that it will accept proposals that involve testing by more than one company. While the final policy does not require every testing company to be identified in the initial waiver proposal, no company can test subject to a waiver unless and until it has been identified. In the supplementary information accompanying the final policy, the CFPB states that the policy” should not be read to prevent a trade association–or indeed any other entity, including non-profit groups or third-party vendors–from helping to facilitate cost-sharing.”
The waiver program’s requirements and the CFPB’s description of the “safe harbor” a waiver provides shows why it is critical for companies considering the testing of trial disclosures to involve legal counsel in the proposal process. The final policy requires a company to “identify with particularity [in its waiver proposal] which provisions of current rules or enumerated consumer laws are to be temporarily waived in connection with the trial disclosure program.” It also requires the CFPB in the document granting a waiver to “specify the rules and statutory provisions that the Bureau will waive during the test period for the testing company or companies.”
A company that fails to adequately identify all of the legal requirements with which its trial disclosures might be deemed non-compliant risks legal exposure. While the CFPB states in the supplementary information that a waiver provides legal protection from private actions as well as “an enforcement or supervisory action by [the CFPB, other federal regulators or state regulators],” it makes clear that such protection only extends to actions that are “based on statutory or regulatory provisions that are within the scope of the waiver and against a company with an approved program in compliance with the terms of the waiver.” (The CFPB acknowledges in the supplementary information that it lacks authority to waive state disclosure requirements but states that it will endeavor to work with state regulators to secure their support for a particular trial disclosure program.)
Companies seeking waivers also need to consider the potential impact of the final policy’s requirement for the CFPB to publish notice on its website of a trial disclosure program approved for a waiver. In addition to identifying the company or companies involved, the notice must include a summary of “the changed disclosures to be used.”