Self Police. Self Report. Remediate. Cooperate. This is what the CFPB expects if and when there is a violation of its rules. According to the agency, if you follow these guidelines, it will go easier on you, maybe.
In essence, the CFPB has issued a formal policy in which it encourages lenders to come forward and provides specific guidelines as to the extent of forgiveness it will demonstrate. Central to this policy is the ongoing theme present in nearly every guideline, rule and other policy statement issued by the agency:
Companies undertaking suitable and legitimate self-controls who are involved in violations will be significantly better positioned if they can show a violation was not the result of systemic failures or a disinterested attitude toward compliance.
On the other hand, even self-reporting will not necessarily prevent harsh consequences for a lender whose overall business strategy and culture were inconsistent with the CFPB’s mandates and who did not initiate proper internal control mechanisms ultimately leading to pattern and practice violations.
Obviously, these are two extremes, and most fact patterns will fall somewhere in the middle. What is significant about the CFPB’s written policy is that it again stresses the overall focus on prevention and recognizes that lenders cannot police the world.
The fact the CFPB specifically discusses informal action in response to violations in the context of lenders who have exercised reasonable efforts at compliance underscores the agency’s desire to create an industry-wide culture of internal compliance management as opposed to external auditing as the best long-term strategy to protect consumers. Hence, the “forgiveness” policy the CFPB issued provides significant insight into their mindset, beyond the mere criteria it will apply when a lender comes forward and self-reports a violation.
