CFPB issues policies to facilitate innovation, compliance

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The Consumer Financial Protection Bureau (CFPB) issued three new policies this week designed to promote innovation and facilitate compliance.

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The first policy is called the No-Action Letter (NAL) Policy. The NAL policy says that the CFPB will not bring a supervisory or enforcement action against a company for providing a product or service under certain facts and circumstances. The bureau issued its first NAL under the new policy in response to a request by the Department of Housing and Urban Development (HUD) about housing counseling agencies (HCAs). The NAL states that the CFPB won’t take supervisory or enforcement action against HUD-certified HCAs that have entered into certain fee-for-service arrangements with lenders for pre-purchase housing counseling services. The NAL is intended to enhance the ability of housing counseling agencies to obtain funding from additional sources.

The second policy is the Trial Disclosure Program (TDP) Policy. The TDP Policy relates to entities seeking to improve consumer disclosures. The Dodd-Frank Act gives the CFPB the authority to provide certain legal protections for entities to conduct trial disclosure programs. The new policy streamlines the application and review process.

The third new policy is called the Compliance Assistance Sandbox (CAS) Policy. This action allows for the testing of a financial product or service where there is regulatory uncertainty.

“Innovation drives competition, which can lower prices and offer consumers more and better products and services. New products and services can expand financial options, especially to unbanked and underbanked households, giving more consumers access to the benefits of the financial system. The three policies we are announcing today are common-sense policies that will foster innovation that ultimately benefits consumers,” CFPB Director Kathleen Kraninger said.

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