The CFPB has revised its internal supervisory appeals process for institutions seeking to appeal a compliance rating or an adverse material finding.  The revisions became effective immediately upon publication in the Federal Register on February 22, 2024. 

As an initial matter, the revised appeals process references the “Supervision Director” rather than the “Associate Director” (for supervision, enforcement, and fair lending).  The revised process includes a footnote which states:

The position of “Supervision Director” encompasses the combined positions of the Assistant Director for Supervision Policy and the Assistant Director for Supervision Examinations.  Previously, these positions were occupied by the same individual, and the Bureau is in the process of consolidating these two positions into one Supervision Director position.

The key changes made to the appeals process consist of the following:

• Within five business days of the receipt of an appeal, the Supervision Director shall designate a committee composed of three CFPB managers who were not involved in the supervisory matter being appealed and who have relevant expertise on the issue raised by the appeal.  Previously, the appeals committee was comprised of one member of the Associate Director’s staff, one or more representatives from CFPB Headquarters Supervision management, and one or more representatives from CFPB regional management.  Also under the revised rule, the CFPB’s General Counsel will designate legal counsel to advise the appeals committee.
• In addition to an adverse finding conveyed to an entity in a supervisory letter, an entity can appeal any rating.  Previously, in addition to an adverse finding, an entity could only appeal a compliance rating that was less than satisfactory (a 3, 4, or 5).
• As an alternative to upholding or rescinding a supervisory finding, the appeals committee can remand the supervisory finding to Supervision staff to consider a modified finding.  Previously, the appeals committee could only uphold or rescind a supervisory finding.
• An entity filing an appeal must provide (1) a copy of a board resolution or other formal document issued by the entity’s board of directors or principal(s) which authorizes the filing of an appeal, and (2) a statement of whether or not the entity’s board of directors or principal(s) requests an oral presentation to the CFPB.  If an oral presentation is requested, a member of the board or a principal must participate in and lead the oral presentation.  Previously, an entity filing an appeal was required to provide a statement that the entity’s board of directors or principal(s) had authorized the filing of the appeal but documentation of the authorization was not required.  In addition, there was previously no requirement for a member of the board of directors or a principal to participate in and lead an oral presentation.

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