CFPB Announces Proposed No-Action Letter Program

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On October 10, 2014, the Consumer Financial Protection Bureau (CFPB) announced a proposed policy under which they would issue No-Action Letters to applicants indicating that the CFPB would not initiate supervisory or enforcement action regarding innovative financial products or services. Under this proposal, the CFPB would issue these No-Action Letters when a new financial product or service promises "substantial customer benefit where there is substantial uncertainty whether or how specific provisions of statutes or regulations implemented by the [CFPB] would be applied."

In order to obtain a No-Action Letter, the applicant would be required to show the product would substantially benefit consumers, how it will work and the consumer risks involved. Additionally, an applicant must explain exactly what regulatory uncertainty exists and how that uncertainty interferes with the development of the product.

The proposed program offers fairly limited assurances to applicants. The No-Action Letters would indicate that the CFPB has no present intention to recommend initiation of a supervisory or enforcement action with respect to a specific proposed product or service. Additionally, No-Action Letters would be subject to modification or revocation at any time in the sole discretion of the CFPB. The No-Action Letters may be conditioned on particular requirements of the applicant, including data-sharing with the CFPB. Also, the No-Action Letters would not be binding on the CFPB, courts or other regulators who may challenge the product or service.

The CFPB is seeking comments in connection with this proposal through December 2014.