[author: Michael S. Lawrence]

This past Wednesday, the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) issued Final Rules which provide greater clarity into the process by which it will adjudicate consumer protection provisions set forth in Title X of the Dodd-Frank Act. The Bureau summarized its primary goal of “creat[ing] an adjudicatory process that provides for the expeditious resolution of claims while ensuring that parties who appear before the Bureau receive a fair hearing.” The Bureau modeled its process after that of the Federal Trade Commission and the Securities Exchange Commission; processes that were previously implemented with a similar stated purpose.

Under the process set forth in the Final Rule, a hearing officer will recommend a decision in each administrative adjudication. Any party will then have a right to contest the recommended decision “by filing a notice of appeal and perfecting the appeal by later filing an opening brief.” In the event that an appeal is not timely noticed or perfected, the Director will have the option of either adopting as final the hearing officer recommendation or ordering further briefing on any fact finding or legal determination. The hearing officer will also have authority to hear any party’s dispositive motion subject to the same appeal process as that applicable to a final recommendation. The Final Rule also sets a deadline of 300 days from service of the notice of charges or 90 days after briefing is complete to issue a recommendation. The Final Rule provides for extensions beyond the 300-day time limit in rare circumstances.

If a recommendation is appealed to the Director or the Director orders additional briefing on his or her own, the Office of Administrative Adjudication will notify the parties that the case has been submitted for final Bureau decision which the Director must issue within 90 days after submission of reply briefs.

The Final Rule also implements a discovery procedure by which the Bureau’s Office of Enforcement will provide any party to an adjudication proceeding an opportunity to review certain categories of materials obtained by the Office of Enforcement in the course of its investigation as well as non-privileged documents created by the Bureau. Pursuant to the Final Rule, the Bureau retains the obligation to turn over any “materially exculpatory information in the Office of Enforcement’s Possession.”

In sum, the Final Rule implements a procedure that has been time tested by other federal enforcement bodies and appears to strike a fair balance, procedurally, between a fair adjudication process and one that moves along with some degree of efficiency. Of course, it is impossible to tell what the implications of such an process when many of the provisions in Title X remain undefined, as do the Bureau’s intended targeted entities and transactions once it steps up its enforcement efforts.