The Office of Inspector General (OIG) for the Federal Reserve Board and CFPB has issued a report on its evaluation of the CFPB’s process for conducting enforcement investigations.  OIG concluded that the CFPB can enhance certain aspects of that process as described below.

In its evaluation, OIG focused on the efficiency of the Office of Enforcement’s process for conducting investigations, and reviewed Enforcement’s practices for tracking and monitoring matters.  The scope of OIG’s evaluation covered the preresearch, research, and investigation phases of the CFPB’s enforcement process, which includes initiating an investigation through settling or filing a public enforcement action or closing the investigation without an enforcement action.  OIG looked at investigations closed with or without enforcement actions from January 2017 through December 2021. OIG judgmentally selected 15 of 268 investigations during that period that Enforcement settled, filed a public enforcement action for, or closed without action.  For the 15 investigations, OIG reviewed documentation produced during the investigations and other relevant documentation to assess timeliness and identify factors that may have contributed to process efficiencies or inefficiencies.  OIG also looked at historical data for investigations to assess the effects of resource availability and changes in priorities since 2011.

The OIG made the following findings and recommendations:

• In 2015, the CFPB implemented a performance measure to file or settle 65 percent of the agency’s enforcement actions within 2 years of opening the investigation.  Enforcement did not meet that goal in any of the five years since fiscal year 2017.  Factors that affected Enforcement’s ability to meet the 2-year goal included leadership transitions, entity cooperation, complexity of enforcement matters and quantity of data, competing litigation work, joint investigations, and resource constraints.  OIG learned that Enforcement is not tracking the timing expectations in its internal guidance for Enforcement team members to use in their enforcement work.  The guidance describes key steps and decision points in each of the major phases of the enforcement process and describes process and timing expectations for certain key steps.  OIG recommended that the Associate Director of Supervision, Enforcement, and Fair Lending (SEFL) incorporate the timing expectations established in the internal guidance into the tracking and monitoring of matters to help identify inefficiencies that, if addressed, could mitigate delays during enforcement investigations.  In his response to OIG’s draft report, David Uejio, Acting Associate Director of SEFL, stated that Enforcement plans to identify appropriate steps in the enforcement process to track, assess appropriate reporting methods, and implement regular tracking and reporting of those steps by the end of fiscal year 2024.
• Enforcement’s Policies and Procedures Manual provides that Enforcement staff are responsible for ensuring that the matter management system is updated at all stages of an investigation.  It also provides that Enforcement staff should upload signed Civil Investigative Demand (CID) packages (i.e. a CID signed by the Enforcement Director or Deputy Director) and ensure that information related to past CIDs is available on the system.  OIG found that although the manual provides guidance for opening matters, Enforcement did not have a standardized approach for documenting information in the system and that, as a result, information in the system was incomplete.  Enforcement issued a matter management system checklist and how-to-guide in February 2022 and updated that document in June 2023.  The guidance conveys expectations to Enforcement staff on how to update fields and use various functions in the matter management system.  OIG recommends that training should be provided to Enforcement staff to reinforce the current guidance so as to better enable Enforcement teams to maintain accurate complete and uniform documents pertaining to enforcement matters.  In his response to OIG’s draft report, Acting SEFL Director Uejio stated that Enforcement will likely provide training to Enforcement staff to reinforce the current guidance by the third quarter of fiscal year 2024.

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