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OIG to look at presence of CFPB enforcement attorneys in exams

Posted in CFPB Enforcement, CFPB Exams

The CFPB’s practice of bringing enforcement attorneys to examinations has been a continuing concern for industry.  In particular, supervised entities worry that the participation of enforcement attorneys in examinations inhibits free and open communication, and signals the CFPB’s intention to use the examination process as a development ground for enforcement actions.  

We were pleased to see that the 2012 CFPB Ombudsman’s Report, released last November, contained some indication that the Bureau was listening to the industry’s concerns. The report stated, that as a result of meetings held with representatives of industry and others, the Ombudsman was recommending that the CFPB review its policy of having enforcement attorneys present at examinations. 

It now appears that the Fed’s Office of the Inspector General will be looking at the CFPB’s practice.   In its work plan updated as of February 22, 2013, the OIG stated that it “is conducting an evaluation of the CFPB’s integration of enforcement attorneys into its examinations of banking and nonbanking institutions’ compliance with applicable consumer protection laws and regulations.”   According to the report, the OIG’s objectives are to assess the “potential risks” associated with the CFPB’s practice and the “effectiveness of any safeguards that the CFPB has adopted to mitigate [such] potential risks.”