Politico has reported that, effective November 1, the CFPB will end its practice of having enforcement attorneys regularly participate in examinations of supervised entities. According to the report, Director Cordray announced the change on a conference call with CFPB examiners. The report indicated that a CFPB spokeswoman attributed the change to an internal review that aimed to improve the supervision process and found that having both examiners and enforcement attorneys present at exams was not efficient.
Since first learning of the CFPB’s practice, we have expressed our deep concern about the practice’s inhibiting effect on free and open communications between the CFPB and supervised entities and urged the CFPB to reconsider the practice. In ending the practice, the CFPB appears to have listened to those concerns which were widely-voiced by industry. It is probably not completely coincidental that the CFPB did this about face when the Fed’s Office of Inspector General was poised to issue a report about this controversial practice. We commend the CFPB for making the change and hope it will lead to a more cooperative and less enforcement-oriented examination process.
While the change in policy is welcomed, it would be a serious mistake for any supervised institution to read the change as signifying that the CFPB will become more lax in exercising its supervisory authority. Indeed, Director Cordray made clear in his announcement of the change that there will still be very close communication between examiners and enforcement attorneys.