CFPB Plans to Provide Early Warning of Possible Enforcement Actions

The Consumer Financial Protection Bureau (CFPB) Monday outlined plans to provide advance notice of potential enforcement actions to individuals and firms under investigation. The Early Warning Notice process allows the subject of an investigation to respond to any potential legal violations that CFPB enforcement staff believe have been committed before the Bureau ultimately decides whether to begin legal action.

“The Early Warning Notice announced today strikes a balance between the goal of fairness to those being investigated and our mission to protect consumers,” said Raj Date, Special Advisor to the Secretary of the Treasury for the CFPB. “This process will help us fulfill our commitment to transparency in enforcing the law.”

The Early Warning Notice process is modeled on similar procedures that have been successful at other federal agencies. It begins with the Office of Enforcement explaining to individuals or firms that evidence gathered in a CFPB investigation indicates they have violated consumer financial protection laws. Recipients of an Early Warning Notice are then invited to submit a response in writing, within 14 days, including any relevant legal or policy arguments and facts.

In July, the CFPB’s Office of Enforcement made public its rules regarding the initiation and execution of enforcement investigations. The Early Warning Notice is not required by law, but CFPB believes it will promote even-handed enforcement of consumer financial laws. The decision to give notice in particular cases is discretionary and will depend on factors such as whether prompt action is needed.

The CFPB is the first agency whose mission is ensuring that consumer financial markets work for American families. The Bureau has the authority to enforce consumer financial laws and to supervise the nation’s largest banks, thrifts, credit unions, and certain other entities offering consumer financial products and services that collectively interact with the majority of consumers in the United States.

More information about the Early Warning Notice can be found at: www.consumerfinance.gov/wp-content/uploads/2011/11/EarlyWarningNotice.pdf