On October 10, 2014, the CFPB issued notice of and requested public comment on a proposed policy allowing CFPB staff to issue no-action letters (NALs) for “innovative financial products or services that substantially benefit consumers.” The proposal is specifically designed for new financial products or services as to which the application of statutory or regulatory provisions is uncertain. The CFPB believes that such uncertainty may discourage market innovations by preventing development of or investment in consumer-friendly products because of the potential threat of enforcement or supervisory actions. To reduce the regulatory uncertainty around such emerging financial products or services, the CFPB is proposing a process by which an entity may submit a request for a NAL from the agency’s staff.

At first blush, the proposal appears to be a welcome development, but the policy as written sets forth quite a narrow set of circumstances in which NALs can be requested and imposes significant burdens on requesters. Moreover, as is the case with other federal agency NAL practices, a resulting CFPB NAL, as a staff determination directed only at the requesting party, would create no legal precedent for the marketplace as a whole. Further, the CFPB seeks to reserve the power to revoke a NAL at any time, meaning a NAL may be of limited value even to the requesting party.