The CFPB finalized a policy that aims to promote innovation in the financial services marketplace. Generally, the policy establishes a process for companies to apply for a “no-action letter” from the Bureau. The no-action letter essentially indicates that the Bureau has no present intention to recommend or initiate any enforcement or supervisory action with respect to the company’s product or service under consideration.
The new policy is designed to enhance regulatory compliance in instances where innovative financial products or services may be beneficial to consumers, but there is uncertainty as to whether or how the product fits in the current regulatory landscape. The CFPB acknowledges that companies may be discouraged from developing new innovations where the product or service is not explicitly addressed or even contemplated under existing law. Accordingly, the Bureau has developed this policy as a means to reduce such regulatory uncertainty.
The policy has five sections:
- Section A describes information that should be included in requests for a No-Action Letter
- Section B describes types of responses the staff may provide to requests for a No-Action Letter
- Section C lists factors the staff may consider in deciding whether to provide a No-Action Letter
- Section D describes the general content and limitations of No-Action Letters
- Section E describes disclosure of data received from entities who have requested No Action Letters.
The policy also states that it is not a waiver of any law or regulation, and will not give a requesting entity an exemption from complying with any statutory or regulatory rules, and, the no-action letters are not binding. In other words, the letters will not bind courts or other third parties, including consumers or other regulators, who may challenge the product or service.
This policy will only be applicable to credit unions directly supervised by the CFPB- those with over $10 billion in assets.
