CFPB Proposes Consumer Disclosure Experiments

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On December 13, the Consumer Financial Protection Bureau (Bureau) issued a proposal that would allow banks to test their own consumer disclosures, with Bureau approval, to see if the disclosure is effective. Known as the “Policy to Encourage Trial Disclosure Programs,” the Bureau’s goal is to make consumer disclosure more “timely and understandable.”

“As part of our efforts to foster innovation in consumer financial markets, the proposed policy will allow companies to conduct real world trials of disclosure alternatives,” said Richard Cordray, Director of the Bureau. “That will help the Bureau identify what works and does not work to provide consumers with the clear information they need to make financial decisions in a marketplace of evolving programs and products.” The program would involve a waiver, issued by the Bureau, of disclosure requirements that otherwise would be applicable to banks that are approved to participate. “Under the proposed Policy, if the Bureau approves a specific trial, then, for the duration of an agreed testing period, the Bureau will deem the testing company’s disclosure, to the extent that it is used solely by the testing company under the terms and conditions approved by the Bureau, to be in compliance with, or hold it exempt from, applicable federal disclosure requirements.”

In addition, the proposal “lays out eligibility criteria for trial programs, which require companies proposing such tests to provide certain information to the Bureau.” The proposal states that new disclosures could include modifications to an existing model form, changed delivery mechanisms, wholesale replacement of a model form or existing disclosure requirements with new disclosure requirements or forms, and/or the elimination of select disclosure requirements.

Comments from the public, including other regulatory agencies, will be due 60 days from publication in the Federal Register, expected shortly.

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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.

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