The CFPB has issued a proposed policy under which it would exempt individual companies, on a case-by-case basis, from current federal disclosure requirements to allow those companies to test trial disclosures. The proposal, which is directed at “banks, thrifts, credit unions, and other financial services companies,” contemplates that participating companies would share test result data with the CFPB. The CFPB believes the information generated by the trial programs “may then help the Bureau to establish more effective disclosure rules and practices.”
The proposal is issued in reliance on the CFPB’s 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 proposed policy has four sections that address the: (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) CFPB’s procedures for approved programs, and (4) CFPB’s disclosure of information on trial programs. Comments on the proposal are due by February 15, 2013.
In its announcement of the proposal, the CFPB stated that the proposal “builds on the Bureau’s streamlining initiative, which intends to update, modify, or eliminate outdated or unnecessary provisions in the Bureau’s inherited regulations.” To date, of the candidates for streamlining identified by the CFPB in its request last year for public comment on opportunities for streamlining, the only candidate on which the CFPB has acted is the Regulation Z credit card ability-to-pay rule. The CFPB has proposed to amend that rule to permit issuers to consider income or assets to which an applicant who is 21 or older has a “reasonable expectation of access.” (Another candidate was the ATM sticker requirement but Congress preempted the CFPB last week by passing a bill that amends the Electronic Fund Transfer Act to eliminate the sticker requirement.)
According to the CFPB’s announcement, the proposal is also part of its “Project Catalyst” initiative. The CFPB had described that initiative as “designed to encourage consumer-friendly innovation and entrepreneurship in markets for consumer financial products and services.” We have previously shared our thoughts on that initiative, and suggested several things technology innovators should do before presenting their ideas to the CFPB.