On Friday, October 10, 2014, the CFPB issued a proposed Policy on No-Action Letters (Policy) with a request for comments.
The focus of the Policy is on new financial products or services where there may be uncertainty about how existing statutes and regulations apply. These new products or services must promise substantial consumer benefit. A No-Action Letter (NAL) would state that, subject to certain conditions at the CFPB staff’s discretion, the staff has "no present intention to recommend initiation of an enforcement or supervisory action against the requester with respect to particular aspects of its product, under specified identified provisions of statutes or regulations."
The Policy outlines the process for NALs including the factors the CFPB staff will consider in determining whether to issue a NAL.
Submitting Requests for NALs
An entity must submit several pieces of information in requesting a NAL, including the following:
- The name of the entity requesting the NAL, as anonymous requests will not be accepted;
- A description of the product, the timetable on which the product is expected to be offered, and whether the request is limited to a particular time period, volume of transactions or other limitations;
- How the product is likely to provide substantial benefit to consumers and metrics for evaluating such benefit;
- Explanation of potential consumer risks, ways the requester will address and minimize such risks, and the consumer safeguards the requester will employ, although those safeguards may not be required by law;
- A showing of why the NAL is necessary and appropriate to remove substantial regulatory uncertainty, including showing: how the application of specific statutes or regulations is substantially uncertain, the product’s compliance with other relevant regulatory requirements, and why the uncertainty cannot be addressed through other means;
- A description of data that the requester possesses and intends to develop and share with the CFPB; and
- Certain disclosures related to any supervisory or enforcement actions and ongoing, imminent or threatened governmental investigations.
The proposed Policy expressly states that NALs "are not intended for either well-established products or purely hypothetical products that are not close to being able to be offered."
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ABIA will comment. Comments are due to the CFPB on December 15, 2014.