Policy on No-Action Letters and the BCFP Product Sandbox, 64036-64045 [2018-26873]
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64036
Proposed Rules
Federal Register
Vol. 83, No. 239
Thursday, December 13, 2018
This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Chapter X
[Docket No. CFPB–2018–0042]
Policy on No-Action Letters and the
BCFP Product Sandbox
Bureau of Consumer Financial
Protection.
ACTION: Proposed policy guidance and
procedural rule; proposed information
collection; request for comment.
AGENCY:
The Bureau of Consumer
Financial Protection (Bureau or BCFP)
invites the public to take this
opportunity to comment on its proposed
Policy on No-Action Letters and the
BCFP Product Sandbox, which is
intended to carry out certain of the
Bureau’s authorities under Federal
consumer financial law; and a proposed
information collection associated with
applications submitted by applicants
requesting admission to the BCFP
Product Sandbox under the proposed
Policy as required by the Paperwork
Reduction Act of 1995.
DATES: Written comments are
encouraged and must be received on or
before February 11, 2019.
ADDRESSES: You may submit comments,
identified by Docket No. [CFPB–2018–
0042], by any of the following methods:
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Email: FederalRegisterComments@
cfpb.gov. Include Docket No. [CFPB–
2018–0042] in the subject line of the
email.
• Mail/Hand Delivery/Courier:
Comment Intake, Bureau of Consumer
Financial Protection, 1700 G Street NW,
Washington, DC 20552.
Instructions: All submissions should
include the agency name and docket
number. Because paper mail in the
Washington, DC area and at the Bureau
is subject to delay, commenters are
encouraged to submit comments
electronically. In general, all comments
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SUMMARY:
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received will be posted without change
to https://www.regulations.gov. In
addition, comments will be available for
public inspection and copying at 1700
G Street NW, Washington, DC 20552, on
official business days between the hours
of 10 a.m. and 5 p.m. Eastern Standard
Time. You can make an appointment to
inspect the documents by telephoning
(202) 435–7275. All comments,
including attachments and other
supporting materials, will become part
of the public record and subject to
public disclosure. Sensitive personal
information, such as account numbers
or Social Security numbers, should not
be included. Comments generally will
not be edited to remove any identifying
or contact information.
FOR FURTHER INFORMATION CONTACT: For
additional information about the
proposed Policy, contact Paul Watkins,
Assistant Director; Edward Blatnik,
Senior Counsel; Albert Chang, Counsel;
Office of Innovation, at
officeofinnovation@cfpb.gov or 202–
435–7000. If you require this document
in an alternative electronic format,
please contact CFPB_Accessibility@
cfpb.gov.
Documentation prepared in support of
the information collection request is
available at www.regulations.gov.
Requests for additional information on
the proposed information collection
should be directed to the Bureau of
Consumer Financial Protection,
Attention: PRA Office, 1700 G Street
NW, Washington, DC 20552, (202) 435–
9575, or email: PRA@cfpb.gov. Please do
not submit comments to this mailbox.
SUPPLEMENTARY INFORMATION:
I. Background
In section 1021(a) of the Dodd-Frank
Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act),
Congress established the Bureau’s
statutory purpose as ensuring that all
consumers have access to markets for
consumer financial products and
services and that markets for consumer
financial products and services are fair,
transparent, and competitive.1
Relatedly, the Bureau’s objectives
include exercising its authorities under
Federal consumer financial law for the
purposes of ensuring that outdated,
unnecessary, or unduly burdensome
regulations are regularly identified and
1 12
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U.S.C. 5511(a).
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addressed in order to reduce
unwarranted regulatory burdens, and
that markets for consumer financial
products and services operate
transparently and efficiently to facilitate
access and innovation.2
Congress has given the Bureau a
variety of authorities under Title X of
the Dodd-Frank Act and the enumerated
consumer laws 3 that it can exercise to
promote this purpose and these
objectives. These authorities include the
authority to permit certain activity by a
particular entity (or entities) by order
(including approvals and exemptions),
and discretionary supervision and
enforcement authority.4
Pursuant to the purpose, objectives,
and certain of the authorities listed
above, the Bureau proposed its Policy
on No-Action Letters in October 2014 5
and finalized it in February 2016 (2016
Policy).6 The 2016 Policy provides for
the issuance of No-Action Letters
consisting of non-binding staff-level noaction recommendations. The Bureau
has issued only one such No-Action
Letter to date.7
II. Summary of the Proposed Policy
In line with the above authority, the
Bureau is proposing to revise the 2016
Policy and proposing the BCFP Product
Sandbox through its proposed Policy on
No-Action Letters and the BCFP Product
Sandbox (Policy) in order to more
effectively carry out its statutory
purpose and objectives. As noted, the
Bureau has provided only one NoAction Letter under the 2016 Policy.
The Bureau believes this strongly
suggests that both the process required
to obtain a No-Action Letter and the
relief available under the 2016 Policy
have not provided firms with sufficient
incentives to seek No-Action Letters
from Bureau staff. Accordingly, the
Bureau is seeking comment on a number
of changes to the 2016 Policy that would
address these issues and bring certain
aspects of the Bureau’s policy more into
alignment with no-action letter
2 12
U.S.C. 5511(b)(3), (5).
U.S.C. 5481(12).
4 See notes 61, 64–65, infra.
5 79 FR 62118 (Oct. 16, 2014).
6 81 FR 8686 (Feb. 22, 2016).
7 See Bureau of Consumer Financial Protection,
CFPB Announces First No-Action Letter to Upstart
Network (Sept. 14, 2017), available at https://
www.consumerfinance.gov/about-us/newsroom/
cfpb-announces-first-no-action-letter-upstartnetwork/.
3 12
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programs offered by other Federal
regulators. The proposed Policy has two
parts. Part I is a revision of the 2016
Policy designed to increase the
utilization of the Policy and bring
certain elements more in line with
similar no-action letter programs offered
by other agencies. Part II is a description
of the BCFP Product Sandbox.8
The proposed Policy has the
following overarching goals: (1)
Streamlining the application process; (2)
streamlining the Bureau’s processing of
applications; (3) expanding the types of
statutory and/or regulatory relief
available; 9 (4) specifying procedures for
an extension where the relief initially
provided is of limited duration; and (5)
providing for coordination with existing
or future programs offered by other
regulators designed to facilitate
innovation.
Part I: No-Action Letters. In Part I, the
Bureau is proposing to streamline the
process of applying for a No-Action
Letter by eliminating several elements it
believes to be redundant or unduly
burdensome, such as a commitment to
data-sharing.10 Similarly, the Bureau’s
review of applications for a No-Action
Letter would be streamlined to focus on
the quality and persuasiveness of the
application, with particular emphasis
on the potential benefits of the product
or service in question for consumers, the
extent to which the applicant identifies
and controls for potential risks to
consumers, and the extent to which noaction relief is needed. Because these
measures would be likely to expedite
the application and review process, the
Bureau would expect to grant or deny
an application within 60 days of
notifying the applicant that the Bureau
has deemed the application to be
complete.11
To more closely align Part I with
certain aspects of no-action letter
programs offered by other Federal
8 The Bureau believes it is necessary and
appropriate, and in the public interest, to include
both parts in a single Policy in order to establish
uniform procedures to encourage focused
presentation of issues, ensure expeditious
consideration of applications, and minimize the
expenditure of Bureau resources.
9 For convenience, the term ‘‘relief’’ will be used
hereinafter to cover relief from statutory and/or
regulatory provisions.
10 Commenters on the proposed 2016 Policy
stated that it would require applicants to submit an
unduly burdensome volume of information. 81 FR
8686, 8689 (Feb. 22, 2016). Stakeholders have
expressed similar concerns subsequent to the
finalization of the 2016 Policy.
11 In comments on the proposed 2016 Policy,
several stakeholders urged the Bureau to adopt a
specific timetable for granting or denying an
application for a No-Action Letter—ranging from 45
to 90 days—in order to accommodate the rapid
development processes of innovative products and
services. 81 FR 6686, 8689 (Feb. 22, 2016).
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agencies, the Bureau is re-assessing
data-sharing requirements and timeperiod limitations for No-Action Letters
available under Part I.12 In contrast to
the 2016 Policy, which requires
applicants to commit to sharing data
about the product or service in question,
no such data sharing would be expected
under Part I of the proposed Policy.
Similarly, whereas one of the factors
Bureau staff will consider in deciding
whether to grant an application for a
No-Action Letter under the 2016 Policy
is the extent to which the letter would
be limited in duration, the default
assumption under Part I of the proposed
Policy would be that No-Action Letters
would have no such temporal
limitation.
Under the 2016 Policy, a No-Action
letter is a staff recommendation of noaction relief. Under Part I of the
proposed Policy, in contrast, No-Action
Letters would be issued by duly
authorized officials of the Bureau to
provide recipients greater assurance that
the Bureau itself stands behind the noaction relief provided by the letters.
Whereas UDAAP-focused No-Action
Letters were expected to be particularly
uncommon under the 2016 Policy, there
would be no such expectation under
Part I of the proposed Policy.13
Finally, Part I would include a new
section concerning Bureau coordination
with other regulators that offer no-action
letters or similar forms of relief.14
Part II: BCFP Product Sandbox. The
2016 Policy is limited to a single type
of relief: Non-binding staff-level noaction recommendations. In comments
12 Many of the proposed revisions are designed to
more closely align Part I with no-action letter
programs offered by other Federal agencies. See,
e.g., Securities and Exchange Commission,
Procedures Applicable to Requests for No-Action
and Interpretive Letters, Securities Act Release No.
6269 (Dec. 5, 1980) (available at: https://
www.sec.gov/rules/other/33-6269.pdf) (limited
application elements; no temporal limitation; no
data-sharing requirements); Commodity Futures
Trading Commission, Requests for Exemptive, NoAction and Interpretative Letters, 17 CFR 140.99
(same); Federal Housing Finance Agency, 12 CFR
1211.1, 1211.4, 1211.6 (same); Federal Energy
Regulatory Commission, Informal Staff Advice on
Regulatory Requirements; Interpretive Order
Regarding No-Action Letter Process, 70 FR 71487
(Nov. 29, 2005) (same).
13 Several commenters on the proposed 2016
Policy urged the Bureau not to exclude UDAAPfocused No-Action Letters on the grounds that noaction relief is particularly valuable for UDAAP
matters. 81 FR 6686, 8688 (Feb. 22, 2016).
Stakeholders have reiterated this view subsequent
to the finalization of the 2016 Policy, including in
comments submitted in response to the Bureau’s
Request for Information Regarding Bureau Guidance
and Implementation Support. 83 FR 13959 (Apr. 20,
2018).
14 The Bureau has also made a number of
technical changes to accommodate the abovedescribed substantive revisions and to increase
clarity.
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on the proposed 2016 Policy, the Bureau
was urged to provide types of relief that
are legally binding on the Bureau as
well as other parties. In its response to
such comments, the Bureau stated that
‘‘experience with the NAL process will
assist the Bureau in evaluating other
potential’’ forms of relief.15 As noted,
the Bureau has provided only one NoAction Letter under the 2016 Policy
since it was finalized in February 2016,
which strongly suggests that the relief
available under the 2016 Policy has not
provided firms with a sufficient
incentive to seek No-Action Letters from
Bureau staff. In view of this experience,
the Bureau is proposing to create the
BCFP Product Sandbox. The BCFP
Product Sandbox would include noaction relief substantially the same as
that available under Part I, as well as
two forms of additional relief: (a)
Approvals by order under three
statutory safe harbor provisions 16
(approval relief); and (b) exemptions by
order (i) from statutory provisions (as
well as provisions of regulations
implementing the statute in question)
under statutory exemption-by-order
provisions (statutory exemptions); 17 or
(ii) from regulatory provisions that do
not mirror statutory provisions under
rulemaking authority or other general
authority (regulatory exemptions).18
In keeping with the ‘‘sandbox’’
concept, approval relief and exemption
relief would be provided for a limited
period of time. The Bureau expects that
two years would be appropriate in most
cases.19 Part II of the proposed Policy
also includes a section regarding
extensions for participation in the BCFP
Product Sandbox, which would specify
the procedures for applying for such an
extension and clarify the Bureau’s
intention to grant such applications
where there is evidence of consumer
benefit and an absence of consumer
harm. Similarly, in contrast to Part I,
Part II would require applicants to
commit to sharing data with the Bureau
concerning the products or services
offered or provided in the BCFP Product
Sandbox.
Finally, like Part I, Part II would have
a streamlined application and review
process, and the Bureau would expect to
grant or deny an application within 60
days of notifying the applicant that the
Bureau has deemed the application to
15 81
FR 8686, 8688 (Feb. 22, 2016).
note 61, infra.
17 See note 64, infra.
18 See note 65, infra. Collectively, statutory
exemptions and regulatory exemptions are referred
to in the Policy as exemption relief.
19 Like the no-action relief available under Part II,
the no-action relief available under Part II would
not have a limited duration.
16 See
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Federal Register / Vol. 83, No. 239 / Thursday, December 13, 2018 / Proposed Rules
be complete. It would also include a
similar provision concerning Bureau
coordination with other regulators that
offer similar programs designed to
facilitate innovation.
The Bureau invites comments with
respect to any aspect of the proposed
Policy. The Bureau is particularly
interested in comment on the scope of
the grounds for revocation, including
whether there are additional changes in
law that should be included as grounds
for revocation.
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III. Regulatory Requirements
The Bureau has concluded that, if
finalized, this Policy Guidance would
constitute an agency general statement
of policy and a rule of agency
organization, procedure, or practice
exempt from the notice and comment
rulemaking requirements under the
Administrative Procedure Act, pursuant
to 5 U.S.C. 553(b). The Policy is
intended to provide information
regarding the Bureau’s plans to exercise
its discretion to provide no-action,
approval, and exemption relief, and to
describe the procedural components of
such discretion. The Policy does not
impose any legal requirements on third
parties, nor does it create or confer any
substantive rights on third parties that
could be enforceable in any
administrative or civil proceeding.
Because no notice of proposed
rulemaking is required, the Regulatory
Flexibility Act does not require an
initial or final regulatory flexibility
analysis.20
IV. Paperwork Reduction Act
Under the Paperwork Reduction Act
of 1995 (PRA) (44 U.S.C. 3501 et seq.),
Federal agencies are generally required
to seek the Office of Management and
Budget (OMB) approval for information
collection requirements prior to
implementation. Further, the Bureau
may not conduct or sponsor a collection
of information unless OMB approves the
collection under the PRA and it displays
a currently valid OMB control number.
Notwithstanding any other provision of
law, no person is required to comply
with, or is subject to penalty for failure
to comply with, a collection of
information if the collection instrument
does not display a currently valid OMB
control number. OMB has previously
approved the collections of information
contained in the Bureau’s current Policy
on No-Action Letters. The OMB Number
is 3170–0059 (Expiration Date: 02/28/
2019). The Bureau has determined that
certain proposed revisions to the Policy
would result in material changes from
20 5
16:36 Dec 12, 2018
V. Proposed Policy
The text of the proposed Policy is as
follows:
U.S.C. 603(a), 604(a).
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what has been previously approved by
OMB; therefore, the Bureau plans to
submit a request to OMB seeking
approval for the revised information
collections as contained in this
proposed revised Policy.
As part of its continuing effort to
reduce paperwork and respondent
burden, the Bureau conducts a
preclearance consultation program to
provide the general public and Federal
agencies with an opportunity to
comment on the new information
collection requirements in accordance
with the PRA (See 44 U.S.C.
3506(c)(2)(A)). This helps ensure that:
The public understands the Bureau’s
requirements or instructions,
respondents can provide the requested
data in the desired format, reporting
burden (time and financial resources) is
minimized, collection instruments are
clearly understood, and the Bureau can
properly assess the impact of collection
requirements on respondents.
The Proposed Policy contains revised
information collection requirements
which consist of the information that
should be submitted in applications for
admission to the BCFP Product Sandbox
as described below in Section II.B.
Documentation prepared in support of
this information collection request is
available at www.regulations.gov.
Requests for additional information and
comments regarding the proposed
revised collection of information should
be submitted as described in the
ADDRESSES section of this document.
Comments are invited on: (a) Whether
the collection of information is
necessary for the proper performance of
the functions of the Bureau, including
whether the information will have
practical utility; (b) The accuracy of the
Bureau’s estimate of the burden of the
collection of information, including the
validity of the methods and the
assumptions used; (c) Ways to enhance
the quality, utility, and clarity of the
information to be collected; and (d)
Ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Comments submitted in response to this
document will be summarized and/or
included in the request for Office of
Management and Budget (OMB)
approval. All comments will become a
matter of public record.
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Policy on No-Action Letters and the
BCFP Product Sandbox
In section 1021(a) of the Dodd-Frank
Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act),
Congress established the Bureau of
Consumer Financial Protection’s
(Bureau’s) statutory purpose as ensuring
that all consumers have access to
markets for consumer financial products
and services and that markets for
consumer financial products and
services are fair, transparent, and
competitive.21 Relatedly, the Bureau’s
objectives include exercising its
authorities under Federal consumer
financial law for the purposes of
ensuring that outdated, unnecessary, or
unduly burdensome regulations are
regularly identified and addressed in
order to reduce unwarranted regulatory
burdens, and that markets for consumer
financial products and services operate
transparently and efficiently to facilitate
access and innovation.22
Congress has given the Bureau a
variety of authorities under Title X of
the Dodd-Frank Act and the enumerated
consumer laws 23 that it can exercise to
promote this purpose and these
objectives. These authorities include the
authority to permit certain activity by a
particular entity (or entities) by order
(including approvals and exemptions),
and discretionary supervision and
enforcement authority.24 Providing such
types of relief may not only benefit
consumers and entities that offer or
provide consumer financial products or
services; it may also inform the Bureau’s
exercise of other authorities with
respect to such products or services,
such as market monitoring and
rulemaking.
The Policy on No-Action Letters and
the BCFP Product Sandbox (Policy) sets
forth the Bureau’s policy and
procedures regarding (i) issuance of NoAction Letters; and (ii) admission to the
BCFP Product Sandbox, which involves
issuance of (a) approvals by order and/
or exemptions by order, and (b) noaction relief. The Policy’s main purpose
is to provide a mechanism through
which the Bureau may more effectively
carry out its statutory purpose and
objectives.25
21 12
U.S.C. 5511(a).
U.S.C. 5511(b)(3), (5).
23 12 U.S.C. 5481(12).
24 See notes 26, 61, 64–65, infra.
25 The Policy is not intended to, nor should it be
construed to: (1) Restrict or limit in any way the
Bureau’s discretion in exercising its authorities; (2)
constitute an interpretation of law; or (3) create or
confer upon any covered person or consumer, any
substantive or procedural rights or defenses that are
enforceable in any manner. In contrast, a particular
No-Action Letter involves the Bureau’s exercise of
22 12
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The Policy has two parts: (I) NoAction Letters; (II) the BCFP Product
Sandbox. The Bureau considers Part I
and Part II to be mutually exclusive.
Part I. No-Action Letters
This part consists of six sections:
• Section A describes No-Action
Letters.
• Section B describes information
that should be included in applications
for a No-Action Letter.
• Section C lists factors the Bureau
intends to consider in deciding whether
to grant an application for a No-Action
Letter.
• Section D describes the Bureau’s
procedures for issuing No-Action
Letters.
• Section E describes how the Bureau
intends to coordinate with other
regulators with respect to No-Action
Letters.
• Section F describes Bureau
disclosure of information about NoAction Letters.
A. Description of No-Action Letters
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A No-Action Letter under Part I is a
document provided to a particular
entity or entities, based on particular
facts and circumstances, through which
the Bureau exercises its discretionary
supervision and enforcement authority
by providing no-action relief.26 The
Bureau intends that a No-Action Letter
will include a statement that, subject to
good faith, substantial compliance with
the terms and conditions of the letter,
and in the exercise of its discretion, the
Bureau will not make supervisory
findings or bring a supervisory or
enforcement action against the recipient
predicated on the recipient’s offering or
providing the described aspects of the
product or service 27 under (a) its
authority to prevent unfair, deceptive,
or abusive acts or practices; 28 or (b) any
its supervision and enforcement discretion in a
particular manner, and a particular approval or
exemption gives the recipient certain legal rights.
26 See 12 U.S.C. 5561 et seq. (enforcement
authority); 12 U.S.C. 5531(a) (UDAAP enforcement
authority); 12 U.S.C. 5514, 5515 (supervision
authority); 12 U.S.C. 5511(a) (‘‘The Bureau shall
seek to implement and, where applicable, enforce
Federal consumer financial law . . .’’) (emphasis
added); Heckler v. Chaney, 470 U.S. 821, 832
(1985); see also 12 U.S.C. 5512(b)(1) (authorizing
the Director of the Bureau to ‘‘issue . . . guidance
as may be necessary or appropriate to enable the
Bureau to administer and carry out the purposes
and objectives of the Federal consumer financial
laws, and to prevent evasions thereof’’).
27 For convenience, ‘‘described aspects of the
product or service’’ is used in Part I to capture the
subject matter scope of a No-Action Letter,
including both the particular aspects of the product
or service in question, and the particular manner in
which it is offered or provided.
28 Implicit in the statement under part (a) is that
the Bureau has not determined that the acts or
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other identified statutory or regulatory
authority within the Bureau’s
jurisdiction.29 The Bureau intends that
a No-Action Letter will also include a
statement that the letter is limited to the
recipient’s (or recipients’) offering or
providing the described aspects of the
product or service, and that it does not
apply to the recipient’s (or recipients’)
offering or providing different aspects of
the product or service.30 31
B. Submitting Applications for NoAction Letters
Applications for a No-Action Letter
should include the following:
1. The identity of the entity or entities
applying for a No-Action Letter;
2. A description of the consumer
financial product or service in question,
including (a) how the product or service
functions, and the terms on which it
will be offered; and (b) the manner in
which it is offered or provided,
including any consumer disclosures;
3. An explanation of the potential
consumer benefits of the product or
service and/or the manner in which it
is offered or provided;
4. An explanation of the potential
consumer risks posed by the product or
service and/or the manner in which it
is offered or provided, and how the
applicant(s) intends to mitigate such
risks;
5. An identification of the statutory
and/or regulatory provisions from
which the applicant(s) seeks no-action
relief and an identification of the
potential uncertainty, ambiguity, or
barrier that such relief would address; 32
6. If an applicant(s) wishes to request
confidential treatment under the
Freedom of Information Act,33 the
practices in question are unfair, deceptive, or
abusive.
29 The Bureau maintains the right to obtain
information relating to the consumer financial
product or service subject to a No-Action Letter
under its applicable supervision and enforcement
authorities.
30 For example, if only written disclosures were
included within the scope of a No-Action Letter,
marketing representations made orally by call
center representatives could nevertheless be subject
to supervisory or enforcement action.
31 Additional content the Bureau expects to be
included in No-Action Letters is specified in
Section I.D.
32 Applicants should describe the relevant
provisions with as much specificity as practicable,
in part to enable the Bureau to respond
expeditiously to the application. The Bureau
recognizes that in some cases it may be difficult to
determine precisely which provisions would apply,
in the normal course, to the product or service in
question. In other cases, the applicant may lack the
legal resources to make a fully precise
determination. In such circumstances, the applicant
should provide the maximum specification
practicable under the circumstances and explain
the limits on further specification.
33 5 U.S.C. 552.
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Bureau’s rule on Disclosure of Records
and Information,34 or other applicable
law, this request and the basis therefor
should be included in a separate letter
and submitted with the application.35
Applicants are advised to specifically
identify the information for which
confidential treatment is requested, and
may reference the Bureau’s intentions
regarding confidentiality under Section
I.F; and
7. If an applicant(s) wishes the Bureau
to coordinate with other regulators, the
applicant(s) should identify those
regulators, including but not limited to
those that have been contacted about
offering or providing the product or
service in question.36
The Bureau invites applications from
trade associations, service providers,37
and other third-parties. A trade
association may wish to apply for a NoAction Letter on behalf of one or more
of its members. Similarly, a service
provider may wish to apply for a NoAction Letter covering business
relationships with existing or
prospective clients. In either case, the
third-party applicant may be unable to
describe all entities interested in a NoAction Letter. The third-party applicant
may also have difficulty submitting a
complete application without specific
knowledge of the business practices of
every entity interested in a No-Action
Letter.
A trade association, service provider,
or other third-party applicant should
endeavor to submit a complete
application. However, if a third-party
applicant is unable to submit a complete
application,38 the Bureau may issue a
34 12
CFR part 1070.
should describe the relevant legal
bases for confidentiality with as much specificity as
practicable. The Bureau recognizes that some
applicants may lack the legal resources to provide
a detailed and complete showing. In such
circumstances, the applicant should provide the
maximum specification practicable under the
circumstances and explain the limits on further
specification.
36 Depending on the extent of coordination
requested, the Bureau many not be able to respond
to the application within the time frame specified
in Section I.C.
37 The term ‘‘service provider’’ is generally
defined in section 1002(26) of the Dodd-Frank Act
as ‘‘any person that provides a material service to
a covered person in connection with the offering or
provision by such covered person of a consumer
financial product or service.’’ 12 U.S.C. 5481(26).
Some potential service providers may be unable to
submit an application for a No-Action Letter
without entering into a business relationship that
enables them to provide a material service to a
covered person. At the same time, a service
provider may be unable to enter into such a
business relationship absent appropriate relief.
38 For example, although a third-party should
endeavor to identify all other entities jointly
interested in pursuing an application, it may not be
35 Applicants
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provisional No-Action Letter subject to
submission of additional information
and the Bureau’s subsequent issuance of
a non-provisional No-Action Letter.
Based on a review of this additional
information, a non-provisional NoAction Letter may be issued to the thirdparty and/or the entity (or entities)
described by the third-party. Additional
entities described by the third-party
applicant may receive the letter at the
same or later time by informing the
Bureau that they wish to receive the
letter and providing the necessary
information.
Applications may be submitted via
email to: officeofinnovation@cfpb.gov or
through other means designated by the
Office of Innovation.39 Submitted
applications may be withdrawn at any
time. Potential applicants are
encouraged to contact the Office of
Innovation at the same email address for
informal preliminary discussion of a
contemplated proposal prior to
submitting a formal application.40
C. Bureau Assessment of Applications
for No-Action Letters
In deciding whether to grant an
application for a No-Action Letter, the
Bureau intends to consider the quality
and persuasiveness of the application,
with particular emphasis on the
information specified in subsections
I.B.3, I.B.4, and I.B.5.41
The Bureau intends to grant or deny
an application within 60 days of
notifying the applicant that the Bureau
has deemed the application to be
complete.
D. Bureau Procedures for Issuing NoAction Letters
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When the Bureau decides to grant an
application for a No-Action Letter, it
intends to provide the recipient(s) with
a No-Action Letter signed by the
Assistant Director of the Office of
Innovation or other members of the
Office of Innovation, duly authorized by
the Bureau, that sets forth the specific
terms and conditions of the no-action
relief provided.42 The Bureau expects
the No-Action Letter will:
able to identify all such entities by name at the time
of the application. In such cases, the third-party
applicant could describe the type of other entity it
wishes to receive a No-Action Letter.
39 Except as provided in Section I.B, applications
should not include any PII.
40 The email subject line should begin: ‘‘NoAction Letter—Inquiry.’’
41 The decision whether to grant an application
for a No-Action Letter will be within the Bureau’s
sole discretion.
42 If the Bureau decides to deny an application,
it will inform the applicant(s) of its decision. The
Bureau intends to respond to reasonable requests to
reconsider its denial of an application within 60
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1. Identify the recipient(s);
2. Specify the subject matter scope of
the letter, i.e., the described aspects of
the product or service;
3. State that the letter is limited to the
recipient’s (or recipients’) offering or
providing the described aspects of the
product or service, and that it does not
apply to the recipient’s (or recipients’)
offering or providing different aspects of
the product or service;
4. State that the letter is limited to the
recipient(s), and that it does not apply
to any other persons or entities;
5. Require the recipient(s) to inform
the Bureau of material changes to
information included in the application
that would materially increase the risk
of material, tangible harm to consumers;
6. Specify any other limitations or
conditions, and the extent that the
Bureau intends to publicly disclose
information about the No-Action
Letter; 43
7. State that, subject to good faith,
substantial compliance with the terms
and conditions of the letter, and in the
exercise of its discretion, the Bureau
will not make supervisory findings or
bring a supervisory or enforcement
action against the recipient(s)
predicated on the recipient’s (or
recipients’) offering or providing the
described aspects of the product or
service under (a) its authority to prevent
unfair, deceptive, or abusive acts or
practices; 44 or (b) any other identified
statutory or regulatory authority within
the Bureau’s jurisdiction.45
8. State that, if the No-Action Letter
is revoked for a reason other than the
recipient’s (or recipients’) failure to
substantially comply in good faith with
the terms and conditions of the letter,
the revocation is prospective only; i.e.,
that the Bureau would not pursue an
action to impose retroactive liability in
such circumstances.
In certain circumstances, the Bureau
may revoke the No-Action Letter in
whole or in part. Based, in part, on its
knowledge of no-action letter programs
operated by other Federal agencies, the
days of such requests. Applicants may also
withdraw, modify, and re-submit applications at
any time.
43 If an applicant(s) objects to the disclosure of
certain information and the Bureau insists that the
information must be publicly disclosed if a NoAction Letter is issued, the applicant(s) may
withdraw the application and the Bureau intends to
treat all information related to the application as
confidential to the full extent permitted by law.
44 Implicit in the statement under part (a) is that
the Bureau has not determined that the acts or
practices in question are unfair, deceptive, or
abusive.
45 A No-Action Letter permits the Bureau to
exercise its supervision and enforcement authorities
with respect to the recipient’s (or recipients’)
conduct outside the scope of the No-Action Letter.
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Bureau anticipates revocation to be
quite rare. The Bureau expects the Noaction Letter to specify the grounds of
revocation, which the Bureau
anticipates will be: (i) Failure to
substantially comply in good faith with
the terms and conditions of the letter;
(ii) a determination by the Bureau that
the recipient’s (or recipients’) offering or
providing the described aspects of the
product or service is causing material,
tangible, harm to consumers; and (iii) a
determination by the Bureau that the
legal uncertainty, ambiguity, or barrier
that was the basis for grant of a NoAction Letter has changed as a result of
as statutory change or a Supreme Court
decision.
Before revoking a No-Action Letter,
the Bureau will notify the recipient(s) of
the grounds for revocation, and permit
an opportunity to respond within a
reasonable period of time. If the Bureau
determines that the recipients(s) failed
to substantially comply in good faith
with the terms and conditions of the NoAction Letter, it will offer the
recipient(s) an opportunity to cure the
failure within a reasonable period of
time before revoking the No-Action
Letter. If the Bureau revokes or partially
revokes a No-Action Letter, it will do so
in writing and it will specify the
reason(s) for its decision. The Bureau
intends to allow the recipient(s) to
wind-down the offering or providing of
the describe aspects of the product or
service during an appropriate period
after revocation, unless the revocation
was based upon the product or service
causing material, tangible harm to
consumers and a wind-down period
would increase such harm.
E. Regulatory Coordination
Section 1015 of the Dodd-Frank Act
instructs the Bureau to coordinate with
Federal agencies and State regulators, as
appropriate, to promote consistent
regulatory treatment of consumer
financial and investment products and
services.46 Similarly, section 1042(c) of
the Dodd-Frank Act instructs the Bureau
to provide guidance in order to further
coordinate actions with the State
attorneys general and other regulators.47
Such coordination includes
coordinating in circumstances where
other regulators have chosen to limit
their enforcement or other regulatory
authority. The Bureau is interested in
entering into agreements with State
authorities that issue similar forms of
no-action relief that would provide for
an alternative means of receiving a NoAction Letter from the Bureau, i.e.,
46 12
47 12
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alternative to the process described in
Sections I.B, I.C, and I.D.
Furthermore, the Bureau wishes to
coordinate with other regulators more
generally. To this end, the Bureau
intends to enter into agreements
whenever practicable to coordinate
relief under Part I with similar forms of
relief offered by State, Federal, or
international regulators.
F. Bureau Disclosure of Information
Regarding No-Action Letters
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The Bureau intends to publish NoAction Letters on its website, as well as,
in appropriate cases, a version or
summary of the application. The Bureau
also may publish denials of applications
on its website, including an explanation
of why the application was denied,
particularly if it determines that doing
so would be in the public interest.48
Public disclosure of any other
information regarding No-Action Letters
is governed by applicable law, including
the Dodd-Frank Act,49 the Freedom of
Information Act (FOIA),50 and the
Bureau’s rule on Disclosure of Records
and Information (Disclosure Rule).51
The Disclosure Rule generally prohibits
the Bureau from disclosing confidential
information,52 and defines confidential
information to include information that
may be exempt from disclosure under
the FOIA 53—including Exemption 4
regarding trade secrets and confidential
commercial or financial information
that is privileged or confidential.54 The
Disclosure Rule defines confidential
supervisory information to include any
information provided to the Bureau by
a financial institution to enable the
Bureau to monitor for risks to
consumers in the offering or provision
of consumer financial products or
services.55 Relatedly, the Disclosure
Rule defines business information as
commercial or financial information
obtained by the Bureau from a submitter
that may be protected from disclosure
under Exemption 4 of FOIA, and
generally provides that such business
information shall not be disclosed
pursuant to a FOIA request except in
48 The Bureau intends to publish denials only
after the applicant is given an opportunity to
request reconsideration of the denial. Upon request,
and to the extent permitted by law, the Bureau does
not intend to release identifying information from
published denials, and intends to redact such
information from the denials published on its
website.
49 See, e.g., 12 U.S.C. 5512(c)(8).
50 5 U.S.C. 552.
51 12 CFR part 1070.
52 12 CFR 1070.41.
53 12 CFR 1070.2(f).
54 5 U.S.C. 552(b)(4).
55 12 CFR 1070.2(i)(1)(iv).
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accordance with section 1070.20 of the
rule.56
The Bureau anticipates that much of
the information submitted by applicants
in their applications, and by recipients
during the pendency of the No-Action
Letter, will qualify as confidential
information, which may include
confidential supervisory information
and/or business information, under the
Disclosure Rule.57 In particular,
information requested from applicants
under subsections I.B.3, I.B.4, and I.B.5
is designed to enable the Bureau to
assess potential risks to consumers
posed by a No-Action Letter. Similarly,
under subsection I.D.5, the Bureau is
requiring notification of material
changes to any application information
to enable the Bureau to monitor for risks
during the pendency of a No-Action
Letter. Therefore, the Bureau expects
that much of the information submitted
that is responsive to subsections I.B.3,
I.B.4, I.B.5, and I.D.5 may constitute
confidential supervisory information
since it is obtained, in part, for the
purpose of monitoring for risks to
consumers. Additionally, the Bureau
expects that much of the information
submitted that is responsive to
subsection I.B.2 will constitute business
information. The Bureau expects that it
may also constitute confidential
supervisory information, since
understanding the nature of the
applicant’s product or service and the
manner in which it is offered or
provided is essential for the Bureau to
monitor for risks to consumers.58
Disclosure of information or data
provided to the Bureau under the Policy
to other Federal and State agencies is
governed by applicable law, including
the Dodd-Frank Act 59 and the Bureau’s
Disclosure Rule, and subject to Bureau
Bulletin 12–01.60 This includes
disclosure consistent with Memoranda
of Understanding (MOUs) the Bureau
has with other Federal and State
agencies. For example, under certain
MOUs with other Federal agencies, the
Bureau has agreed to provide CSI to
those agencies.
56 12
CFR 1070.20(a), (b).
the extent associated communications
include the same information, that information
would have the same status. But other information
in associated communications may be subject to
disclosure.
58 To the extent an applicant or recipient submits
information in connection with any of the
identified subsections that is not actually
responsive to these subsections, such information
may be subject to disclosure.
59 See, e.g., 15 U.S.C. 5512(c)(6); 5514(b)(3);
5515(b)(2); 5516(c)(2); 5516(d)(2).
60 Available at: https://files.consumerfinance.gov/
f/2012/01/GC_bulletin_12-01.pdf.
57 To
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64041
To the extent the Bureau wishes to
publicly disclose non-confidential
information regarding a No-Action
Letter, the terms of such disclosure will
be included in the letter. The Bureau
intends to draft the No-Action Letter in
a manner such that confidential
information is not disclosed. Consistent
with applicable law and its own rules,
the Bureau will not seek to publicly
disclose any information that would
conflict with consumers’ privacy
interests.
Part II. BCFP Product Sandbox
This part consists of seven sections:
• Section A describes the three types
of relief available to participants in the
BCFP Product Sandbox.
• Section B describes information
that should be included in applications
for admission to the BCFP Product
Sandbox.
• Section C lists factors the Bureau
intends to consider in deciding whether
to grant an application for admission to
the BCFP Product Sandbox.
• Section D describes procedures for
granting admission to the BCFP Product
Sandbox.
• Section E describes procedures for
granting extensions of participation in
the BCFP Product Sandbox.
• Section F describes how the Bureau
intends to coordinate with other
regulators with respect to the BCFP
Product Sandbox.
• Section G describes Bureau
disclosure of information about the
BCFP Product Sandbox.
A. Types of Relief Available to
Participants in the BCFP Product
Sandbox
1. Approvals
An approval under Part II is relief
provided by the Bureau to a particular
entity or entities, based on particular
facts and circumstances, under one or
more of three statutory safe harbor
provisions.61 An approval issued to a
particular entity or entities will include
(a) a statement that, subject to good faith
compliance with specified terms and
conditions, the Bureau approves the
recipient’s (or recipients’) offering or
providing the described aspects of the
product or service; 62 and (b) a
specification of the legal authority and
61 15 U.S.C. 1640(f) (TILA); 15 U.S.C. 1691e(e)
(ECOA); 15 U.S.C. 1693m(d) (EFTA).
62 For convenience, ‘‘described aspects of the
product or service’’ is used in Part II to capture the
subject matter scope of admission to the BCFP
Product Sandbox and the attendant relief, including
both the particular aspects of the product or service
in question, and the particular manner in which it
is offered or provided.
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rational basis for the Bureau’s issuance
of the approval.
By operation of the applicable
statutory provision(s), the recipient
would have a ‘‘safe harbor’’ from
liability under the applicable statute(s)
to the fullest extent permitted by these
provisions as to any act done or omitted
in good faith in conformity with the
approval; i.e., the recipient would be
immune from enforcement actions by
any Federal or State authorities, as well
as from lawsuits brought by private
parties.63
based on the relevant statutory or
regulatory provisions and on the
recipient’s (or recipients’) offering or
providing the described aspects of the
product or service.66
3. No-Action Relief
The no-action relief available under
Part II is substantially the same as the
no-action relief available under Part I,
including not having a limited
duration.67
2. Exemptions
An exemption under Part II is relief
provided to a particular entity or
entities, based on particular facts and
circumstances, through which the
Bureau exercises its authority to grant
exemptions by order (i) from statutory
provisions (as well as provisions of
regulations implementing the statute in
question) under statutory exemption-byorder provisions (statutory
exemptions); 64 or (ii) from regulatory
provisions that do not mirror statutory
provisions under rulemaking authority
or other general authority (regulatory
exemptions).65 An exemption issued to
a particular entity or entities will
include (a) a statement that, subject to
good faith compliance with specified
terms and conditions, the Bureau
exempts the recipient(s) from complying
with or deems it to be in compliance
with specified statutory or regulatory
provisions in connection with its
offering or providing the described
aspects of the product or service; and (b)
a specification of the legal authority and
rational basis for the Bureau’s issuance
of the exemption.
Where the Bureau provides such an
exemption to a recipient(s), the
recipient(s) would be immune from
enforcement actions by any Federal or
State authorities, as well as from
lawsuits brought by private parties,
B. Submitting Applications for
Admission to the BCFP Product
Sandbox
An application for admission to the
BCFP Product Sandbox should include
the following:
1. The identity of the entity or entities
applying for admission to the BCFP
Product Sandbox;
2. A description of the consumer
financial product or service to be offered
or provided within the BCFP Product
Sandbox, including (a) how the product
or service functions, and the terms on
which it will be offered; and (b) the
manner in which it is offered or
provided to consumers, including any
consumer disclosures;
3. The requested duration of
participation in the BCFP Product
Sandbox,68 and a description of any
other limitations on participation, such
as limits on the volume of transactions,
the number of consumers to which the
product or service is to be offered or
provided, or geographic scope;
4. An explanation of the potential
consumer benefits of the product or
service and/or the manner in which it
is offered or provided, and suggested
metrics for evaluating whether such
benefits are realized, such as consumer
utilization numbers;
5. An explanation of the potential
consumer risks posed by the product or
service and/or the manner in which it
is offered or provided, and how the
63 15 U.S.C. 1640(f); 15 U.S.C. 1691e(e); 15 U.S.C.
1693m(d).
64 See, e.g., 15 U.S.C. 1691c–2(g)(2) (ECOA); 15
U.S.C. 1639(p)(2) (HOEPA); 12 U.S.C. 1831t(d)
(FDIA). Any exemption issued by the Bureau
pursuant to such statutory authority will satisfy any
applicable statutory requirements.
65 See, e.g., United States v. Allegheny-Ludlum
Steel Corp., 406 U.S. 742, 755 (1972) (‘‘It is well
established that an agency’s authority to proceed in
a complex area . . . by means of rules of general
application entails a concomitant authority to
provide exemption procedures in order to allow for
special circumstances.’’); Brodsky v. U.S. Nuclear
Regulatory Comm’n, 783 F. Supp. 2d 448 (S.D.N.Y.
2011) (same); 15 U.S.C. 5512(b)(1) (authorizing the
Director of the Bureau to ‘‘prescribe rules and issue
orders and guidance as may be necessary or
appropriate to enable the Bureau to administer and
carry out the purposes and objectives of the Federal
consumer financial laws, and to prevent evasions
thereof’’).
66 See, e.g., 15 U.S.C. 5532(e) (exemption from a
rule or enumerated consumer law issued by the
Bureau constitutes a safe harbor from liability);
Williams v. Chartwell Fin. Servs., Ltd., 204 F.3d
748, 754 (7th Cir. 2004) (exemption effectively
provides a safe harbor from liability).
67 Although the no-action relief itself is
substantially the same under Part I and Part II,
potential applicants should keep in mind other
differences between Part I and Part II when
deciding whether to apply for a No-Action Letter
under Part I, or for admission to the BCFP Product
Sandbox under Part II, such as differences in data
sharing expectations.
68 The Bureau expects that two years will be an
appropriate duration in most cases. As indicated in
subsection II.A.3, the no-action relief available
under Part II, like the no-action relief available
under Part I, can be of unlimited duration. The
‘‘requested duration of participation in the BCFP
Product Sandbox’’ element pertains only to
approval relief and exemption relief.
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applicant(s) intends to mitigate such
risks, including any plans for addressing
unanticipated consumer harms and the
amount of resources available to provide
restitution for material, quantifiable,
economic harm to consumers caused by
the applicant’s (or applicants’) offering
or providing the product or service;
6. An identification of the statutory
and regulatory provisions from which
the applicant(s) seeks relief, the type of
relief sought (approval, exemption, and/
or no-action relief), and an
identification of the potential
uncertainty, ambiguity or barrier that
such relief would address; 69 70
7. A description of data the
applicant(s) possesses and/or intends to
develop pertaining to the impact of the
product or service on consumers that
will be shared with the Bureau if the
application is granted,71 and a proposed
schedule for sharing this data with the
Bureau;
8. If an applicant(s) wishes to request
confidential treatment under the
Freedom of Information Act,72 the
Bureau’s rule on Disclosure of Records
and Information,73 or other applicable
law, this request and the basis therefor
should be included in a separate letter
and submitted with the application.74
Applicants are advised to specifically
identify the information for which
confidential treatment is requested; and
9. If an applicant(s) wishes the Bureau
to coordinate with other regulators, the
applicant(s) should identify those
regulators, including but not limited to
those that have been contacted about
69 Applicants should describe the relevant
provisions with as much specificity as practicable,
in part to enable the Bureau to respond
expeditiously to the application. The Bureau
recognizes that in some cases it may be difficult to
determine precisely which provisions would apply,
in the normal course, to the product or service in
question. In other cases, the applicant may lack the
legal resources to make a fully precise
determination. In such circumstances, the applicant
should provide the maximum specification
practicable under the circumstances and explain
the limits on further specification.
70 If an applicant(s) seeks an exemption under
statutes that permit the Bureau to issue exemptions
by order provided certain standards are satisfied,
the applicant(s) should explain how the relevant
standards are satisfied.
71 The data the applicant expects to share with
the Bureau should be limited to aggregate data.
72 5 U.S.C. 552.
73 12 CFR part 1070.
74 Applicants should describe the relevant legal
bases for confidentiality with as much specificity as
practicable. The Bureau recognizes that some
applicants may lack the legal resources to provide
a detailed and complete showing. In such
circumstances, the applicant should provide the
maximum specification practicable under the
circumstances and explain the limits on further
specification.
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offering or providing the product or
service in question.75
The Bureau invites applications from
trade associations, service providers,76
and other third-parties. A trade
association may wish to apply for
admission to the BCFP Product Sandbox
on behalf of one or more of its members.
Similarly, a service provider may wish
to apply for admission to the BCFP
Product Sandbox with existing or
prospective clients. In either case, the
third-party applicant may be unable to
describe all entities interested in
admission to the BCFP Product
Sandbox. The third-party applicant may
also have difficulty submitting a
complete application for admission
without specific knowledge of the
business practices of every entity
interested in admission.
A trade association, service provider,
or other third-party applicant should
endeavor to submit a complete
application. However, if a third-party
applicant is unable to submit a complete
application,77 the Bureau may grant
provisional admission to the BCFP
Product Sandbox subject to submission
of additional information and the
Bureau’s subsequent grant of nonprovisional admission. Based on a
review of this additional information,
non-provisional admission may be
granted to the third-party and/or the
entity (or entities) described by the
third-party. Additional entities
identified by the third-party may be
granted admission at the same or later
time by informing the Bureau that they
wish to be granted admission and
providing the necessary information.
Applications may be submitted via
email to: officeofinnovation@cfpb.gov or
through other means designated by the
Office of Innovation.78 Submitted
75 Depending on the extent of coordination
requested, the Bureau many not be able to respond
to the application within the time frame specified
in Section II.C.
76 The term ‘‘service provider’’ is generally
defined in section 1002(26) of the Dodd-Frank Act
as ‘‘any person that provides a material service to
a covered person in connection with the offering or
provision by such covered person of a consumer
financial product or service.’’ 12 U.S.C. 5481(26).
Some potential service providers may be unable to
submit an application for admission to the BCFP
Product Sandbox without entering into a business
relationship that enables them to provide a material
service to a covered person. At the same time, a
service provider may be unable to enter into such
a business relationship absent appropriate relief.
77 For example, although a third-party should
endeavor to identify all other entities jointly
interested in pursuing an application, it may not be
able to identify all such entities by name at the time
of the application. In such cases, the third-party
applicant could describe the type of other entity it
wishes to be admitted to the BCFP Product
Sandbox.
78 Except as provided in Section II.B, applications
should not include any PII.
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applications may be withdrawn at any
time. Potential applicants are
encouraged to contact the Office of
Innovation at the same email address for
informal preliminary discussion of a
contemplated proposal prior to
submitting a formal, complete
application.79
C. Bureau Assessment of Applications
for Admission to the BCFP Product
Sandbox
In deciding whether to grant an
application for admission to the BCFP
Product Sandbox,80 the Bureau intends
consider the quality and persuasiveness
of the application, with particular
emphasis on the information specified
in subsections II.B.4, II.B.5, and II.B.6.
The Bureau intends to grant or deny
an application within 60 days of
notifying the applicant that the Bureau
has deemed the application to be
complete.
D. Procedures for Granting Admission to
the BCFP Product Sandbox 81
When the Bureau decides to grant an
application for admission to the BCFP
Product Sandbox, it intends to provide
the recipient(s) with a document
entitled: BCFP Product Sandbox
Participation Terms and Conditions
(Terms and Conditions document), that
sets forth the terms and conditions of
the recipient’s (or recipients’)
participation in the BCFP Product
Sandbox, including the types and scope
of the relief provided to the recipient(s)
during its participation in the Sandbox.
The Terms and Conditions document
will be signed by the Assistant Director
of the Office of Innovation or other
members of the Office of Innovation,
duly authorized by the Bureau and by
an officer of each recipient.82 The
Bureau expects the Terms and
Conditions document will:
1. Identify the recipient entity or
entities;
2. Specify the subject matter scope of
the document, i.e., the described aspects
of the product or service;
3. State that the document is limited
to the recipient’s (or recipients’) offering
79 The email subject line should begin ‘‘BCFP
Product Sandbox—Inquiry.’’
80 The decision whether to grant an application
for admission to the BCFP Product Sandbox will be
within the Bureau’s sole discretion.
81 The procedures specified in Section II.D may
be modified pursuant to coordination efforts with
other regulators, as specified in Section II.F.
82 If the Bureau decides to deny an application,
it will inform the applicant(s) of its decision. The
Bureau intends to respond to reasonable requests to
reconsider its denial of an application within 60
days of such requests. Applicants may also
withdraw, modify, and re-submit applications at
any time.
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or providing the described aspects of the
product or service, and that it does not
apply to the recipient’s (or recipients’)
offering or providing different aspects of
the product or service;
4. State that the document is limited
to the recipient(s), and that it does not
apply to any other persons or entities;
5. Require the recipient(s) to report
information about the effects of offering
or providing the described aspects of the
product or service on complaint
patterns, default rates, or similar metrics
that will enable to the Bureau to
determine if doing so is causing
material, tangible harm to consumers.
6. Include a commitment by the
recipient(s) to compensate consumers
for material, quantifiable, economic
harm caused by the recipient’s (or
recipients’) offering or providing the
described aspects of the product or
service within the BCFP Product
Sandbox;
7. Specify any other limitations or
conditions, such as the duration of the
recipient’s (or recipients’) participation
in the BCFP Product Sandbox,83 the
nature and extent of the recipient’s (or
recipients’) data sharing, and the extent
that the Bureau intends to publicly
disclose information about the
recipient’s (or recipients’) participation
in the BCFP Product Sandbox; 84
8. (a) State that, subject to good faith
compliance with the terms and
conditions of the document, (i) the
Bureau approves the recipient’s (or
recipients’) offering or providing the
described aspects of the product or
service, and/or (ii) the Bureau exempts
the recipient(s) from complying with or
deems it to be in compliance with
specified statutory or regulatory
provisions in connection with its
offering or providing the described
aspects of the product or service; and (b)
specify the legal authority 85 and
rational basis for the Bureau’s issuance
of the approval and/or exemption.
9. State that, subject to good faith
compliance with the terms and
conditions of the document, and in the
exercise of its discretion, the Bureau
will not make supervisory findings or
bring a supervisory or enforcement
action against the recipient(s)
predicated on the recipient’s (or
recipients’) offering or providing the
83 The Bureau expects two years to be an
appropriate duration in most cases.
84 If an applicant(s) objects to the disclosure of
certain information and the Bureau insists that the
information must be publicly disclosed if admission
to the BCFP Product Sandbox is to granted, the
applicant(s) may withdraw the application and the
Bureau intends to treat all information related to the
application as confidential to the full extent
permitted by law.
85 See notes 61, 64–65, supra.
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described aspects of the product or
service under (a) its authority to prevent
unfair, deceptive, or abusive acts or
practices; 86 or (b) any other identified
statutory or regulatory authority within
the Bureau’s jurisdiction.87
10. State that, if the relief provided
pursuant to the document is revoked for
a reason other than the recipient’s (or
recipients’) failure to comply in good
faith with the terms and conditions of
the document, the revocation is
prospective only; i.e., that the Bureau
would not pursue an action to impose
retroactive liability in such
circumstances.
In certain circumstances, the Bureau
may revoke admission to the BCFP
Product Sandbox in whole or in part.
Based, in part, on its knowledge of
similar relief programs operated by
other Federal agencies, the Bureau
anticipates revocation to be quite rare.
The Bureau expects the Terms and
Condition document to specify the
grounds of revocation, which the
Bureau anticipates will be: (i) Failure to
comply in good faith with the terms and
conditions of the document; (ii) a
determination by the Bureau that the
recipient’s (or recipients’) offering or
providing the described aspects of the
product or service is causing material,
tangible harm to consumers; and (iii) a
determination by the Bureau that the
legal uncertainty, ambiguity, or barrier
that was the basis for the relief provided
has changed as a result of a statutory
change or a Supreme Court decision.
Before issuing a revocation, the
Bureau will notify the recipient(s) of the
grounds for revocation, and permit an
opportunity to respond within a
reasonable period of time. If the Bureau
nonetheless determines that the
recipient(s) failed to comply with the
Terms and Conditions document, it will
offer the recipient(s) an opportunity to
cure the failure within a reasonable
period of time before issuing a
revocation. If the Bureau issues a
revocation for failure to comply in good
faith with the Terms and Conditions
document, it will do so in writing and
it will specify the reason(s) for its
decision, including the reason(s) why
any attempt to cure was inadequate. The
Bureau intends to allow the recipient(s)
to wind-down the offering or providing
of the described aspects of the product
or service during a period of six months
86 Implicit in the statement under part (a) is that
the Bureau has not determined that doing so is
deceptive, unfair, or abusive.
87 The relief provided to a participant(s) in the
BCFP Product Sandbox permits the Bureau to
exercise its supervision and enforcement authorities
with respect to conduct by the participant(s)
outside the scope of that relief.
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after revocation, unless the revocation
was based upon the product or service
causing material, tangible harm to
consumers and a wind-down period
would increase such harm.
E. Procedures for Extension of
Participation in the BCFP Product
Sandbox
Participants in the BCFP Product
Sandbox may apply for an extension of
a specified period of time based upon
the quality and persuasiveness of the
data provided to the Bureau under
Section II.D. The Bureau expects to
place particular weight on the extent to
which the data shows that the described
aspects of the product or service are
benefitting consumers and/or not
causing material, tangible harm to
consumers. Such applications for an
extension should include the proposed
duration of the extension and should be
submitted no later than 90 days prior to
the expiration of the applicant’s
participation in the BCFP Product
Sandbox.88 Alternatively, participants
may reapply by resubmitting the
entirety of the information specified in
Section II.B.
Upon the presentation of persuasive
data, the Bureau anticipates granting
such extension applications for a period
at least as long as the period of the
applicant’s (or applicants’) original
participation in the BCFP Product
Sandbox. The Bureau anticipates
permitting longer extensions where the
Bureau is considering amending
applicable regulatory requirements.89
During the time period pending a rule
amendment, the Bureau intends to
consider means of providing similar
relief to other covered entities that
engage in the same or similar conduct
in offering or providing comparable
products.
F. Regulatory Coordination
Section 1015 of the Dodd-Frank Act
instructs the Bureau to coordinate with
Federal agencies and State regulators, as
appropriate, to promote consistent
regulatory treatment of consumer
financial and investment products and
88 Assuming the two-year period the Bureau
expects to be appropriate in most cases, the Bureau
believes recipients would have sufficient time to
gather evidence supportive of an extension request.
For periods of one year or less, the Bureau may
consider an extension deadline appropriate for the
period in question.
89 The Bureau’s plans regarding rulemaking
activity are set forth in its Semiannual Regulatory
Agenda, published in full on www.reginfo.gov. If
the period of an extension were tied to the Bureau’s
consideration of amending relevant regulatory
provisions and the Bureau announced it was
discontinuing its plans to amend the provisions in
question, the extension period would be adjusted
accordingly, e.g., adjusted to end on a specific date.
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services.90 Similarly, section 1042(c) of
the Dodd-Frank Act instructs the Bureau
to provide guidance in order to further
coordinate actions with the State
attorneys general and other regulators.91
Such coordination includes
coordinating in circumstances where
other regulators have chosen to limit
their enforcement or other regulatory
authority. One method of limiting such
authority is through a State sandbox, or
group of State sandboxes, or other
limited scope State authorization
program (‘‘State sandbox’’).92 The
Bureau is interested in entering into
agreements with State authorities that
operate or plan to operate a State
sandbox that would provide for an
alternative means of admission to the
BCFP Product Sandbox, i.e., alternative
to the process described in Sections II.B,
II.C, and II.D.
Furthermore, the Bureau wishes to
coordinate with other regulators more
generally. To this end, the Bureau
intends to enter into agreements
whenever practicable to coordinate
relief under Part II with similar forms of
relief offered by State, Federal, or
international regulators.
G. Bureau Disclosure of Information
Regarding the BCFP Product Sandbox
The Bureau intends to publish on its
website information about the BCFP
Product Sandbox. For entities admitted
to the BCFP Product Sandbox pursuant
to the process specified in Sections II.B,
II.C, and II.D, the information is
expected to include: (i) The identity of
the entity or entities admitted to the
BCFP Product Sandbox; (ii) the subject
matter scope of its or their
participation; 93 (iii) the duration of its
or their participation; (iv) the types of
relief provided to participant(s); (v) for
approvals and/or exemptions, the legal
authority and rational basis for the
approval and/or exemption; and (vi) in
appropriate cases, a version or summary
of the application.94 The Bureau also
intends to publish on its website
information about denials of
applications submitted pursuant to
90 12
U.S.C. 5495.
U.S.C. 5552(c).
92 The concept of a regulatory sandbox is
relatively new and does not have a precise,
generally accepted definition. The term is used in
this Policy to refer to a regulatory structure where
a participant obtains limited or temporary access to
a market in exchange for reduced regulatory barriers
to entry or reduced regulatory uncertainty.
93 See subsection II.D.2, supra.
94 The Bureau intends, at minimum, to publish
the names of participants admitted to the BCFP
Product Sandbox pursuant to Section II.F, but
reserves the discretion to negotiate any additional
disclosure terms with the corresponding regulator
to the extent permitted by law.
91 12
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Section B, including an explanation of
why the application was denied.95
Public disclosure of any other
information regarding admission to the
BCFP Product Sandbox is governed by
applicable law, including the DoddFrank Act,96 the Freedom of Information
Act (FOIA),97 and the Bureau’s rule on
Disclosure of Records and Information
(Disclosure Rule).98 The Disclosure Rule
generally prohibits the Bureau from
disclosing confidential information,99
and defines confidential information to
include confidential supervisory
information and Bureau information
that may be exempt from disclosure
under the FOIA 100—including trade
secrets and confidential commercial or
financial information that is privileged
or confidential.101 The Disclosure Rule
defines confidential supervisory
information to include any information
provided to the Bureau by a financial
institution to enable the Bureau to
monitor for risks to consumers in the
offering or provision of consumer
financial products or services.102
Relatedly, the Disclosure Rule defines
business information as commercial or
financial information obtained by the
Bureau from a submitter that may be
protected from disclosure under
Exemption 4 of FOIA, and generally
provides that such business information
shall not be disclosed pursuant to a
FOIA request except in accordance with
section 1070.20 of the rule.103
The Bureau anticipates that much of
the information submitted by applicants
in their applications, and by recipients
during their participation in the BCFP
Product Sandbox pursuant to the Terms
and Conditions document, will qualify
as confidential information, which may
include confidential supervisory
information, and/or business
information, under the Disclosure
Rule.104 In particular, the information
requested under subsections II.B.3,
II.B.4, II.B.6, and II.B.8 is designed to
95 Upon request, and to the extent permitted by
law, the Bureau does not intend to release
identifying information from published denials, and
intends to redact such information from the denials
published on its website. The Bureau intends to
publish denials only after the applicant is given an
opportunity to request reconsideration of the
denial.
96 See, e.g., 12 U.S.C. 5512(c)(8).
97 5 U.S.C. 552.
98 12 CFR part 1070.
99 12 CFR 1070.41.
100 12 CFR 1070.2(f).
101 5 U.S.C. 552(b)(4).
102 12 CFR 1070.2(i)(1)(iv).
103 12 CFR 1070.20(a), (b).
104 To the extent associated communications
include the same information, that information
would have the same status. But other information
in associated communications may be subject to
disclosure.
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enable the Bureau to assess potential
risks to consumers posed by the
described aspect of the product or
service. Similarly, subsection II.D.5
requires recipients to report information
about the effects of offering or providing
the described aspects of the product or
service on complaint patterns, default
rates, or similar metrics that will enable
to the Bureau to determine if doing so
is causing material, tangible harm to
consumers. The other data and
information the recipient(s) will provide
pursuant to subsection II.D.6 will
likewise be used by the Bureau to
monitor for risks to consumers.
Therefore, the Bureau expects that much
of the information submitted that is
responsive to subsections II.B.3, II.B.4,
II.B.6, and II.B.8, and the referenced
portions of subsection II.D, may
constitute confidential supervisory
information, since it is obtained for the
purpose of monitoring for risks to
consumers. Additionally, the Bureau
expects that much of the information or
data submitted responsive to
subsections II.B.2, II.B.8, and II.D.6 will
constitute business information. The
Bureau expects that it may also
constitute confidential supervisory
information, since understanding the
nature of the described aspects of the
product or service is essential for the
Bureau to monitor for risks to
consumers.105 106
Disclosure of information or data
provided to the Bureau under the Policy
to other Federal and State agencies is
governed by applicable law, including
the Dodd-Frank Act 107 and the Bureau’s
Disclosure Rule, and subject to Bureau
Bulletin 12–01.108 This includes
disclosure consistent with Memoranda
of Understanding (MOUs) the Bureau
has with other Federal and State
agencies. For example, under certain
MOUs with other Federal agencies, the
Bureau has agreed to provide CSI to
those agencies.
To the extent the Bureau wishes to
publicly disclose non-confidential
105 To the extent an applicant or recipient submits
information in connection with any of the
identified subsections that is not actually
responsive to these subsections, such information
may be subject to disclosure.
106 The Bureau notes that the preceding
protections from public disclosure must be
balanced against the Bureau’s potential need to
publicly disclose submitted data in some form—as
permitted by applicable law and/or consent of
recipients—if it decides to revise relevant
regulatory provisions through notice-and-comment
rulemaking based, in part, on such data—as
provided in Section E.
107 See, e.g., 15 U.S.C. 5512(c)(6); 5514(b)(3);
5515(b)(2); 5516(c)(2); 5516(d)(2).
108 Available at: https://
files.consumerfinance.gov/f/2012/01/GC_bulletin_
12-01.pdf.
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information regarding the BCFP Product
Sandbox, the terms of such disclosure
will be included in the Terms and
Conditions document specified in
Section II.D. The Bureau intends to draft
the document in a manner such that
confidential information is not
disclosed. Consistent with applicable
law and its own rules, the Bureau will
not seek to publicly disclose any
information or data that would conflict
with consumers’ privacy interests.
Dated: December 6, 2018.
Mick Mulvaney,
Acting Director, Bureau of Consumer
Financial Protection.
[FR Doc. 2018–26873 Filed 12–12–18; 8:45 am]
BILLING CODE 4810–AM–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Food and Drug Administration
21 CFR Part 73
[Docket No. FDA–2018–C–4464]
Impossible Foods, Inc.; Filing of Color
Additive Petition
AGENCY:
Food and Drug Administration,
HHS.
ACTION:
Notification of petition.
The Food and Drug
Administration (FDA or we) is
announcing that we have filed a
petition, submitted by Impossible
Foods, Inc., proposing that the color
additive regulations be amended to
provide for the safe use of soy
leghemoglobin as a color additive in
plant-based, non-animal derived ground
beef analogue products.
DATES: The color additive petition was
filed on November 5, 2018.
ADDRESSES: For access to the docket to
read background documents or
comments received, go to https://
www.regulations.gov and insert the
docket number found in brackets in the
heading of this document into the
‘‘Search’’ box and follow the prompts,
and/or go to the Dockets Management
Staff, 5630 Fishers Lane, Rm. 1061,
Rockville, MD 20852.
FOR FURTHER INFORMATION CONTACT:
Ellen Anderson, Center for Food Safety
and Applied Nutrition, Food and Drug
Administration, 5001 Campus Dr.,
College Park, MD 20740, 240–402–1309.
SUPPLEMENTARY INFORMATION: Under
section 721(d)(1) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C.
379e(d)(1)), we are giving notice that we
have filed a color additive petition (CAP
SUMMARY:
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]]>Agencies
[Federal Register Volume 83, Number 239 (Thursday, December 13, 2018)]
[Proposed Rules]
[Pages 64036-64045]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-26873]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 83, No. 239 / Thursday, December 13, 2018 /
Proposed Rules
[[Page 64036]]
BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Chapter X
[Docket No. CFPB-2018-0042]
Policy on No-Action Letters and the BCFP Product Sandbox
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Proposed policy guidance and procedural rule; proposed
information collection; request for comment.
-----------------------------------------------------------------------
SUMMARY: The Bureau of Consumer Financial Protection (Bureau or BCFP)
invites the public to take this opportunity to comment on its proposed
Policy on No-Action Letters and the BCFP Product Sandbox, which is
intended to carry out certain of the Bureau's authorities under Federal
consumer financial law; and a proposed information collection
associated with applications submitted by applicants requesting
admission to the BCFP Product Sandbox under the proposed Policy as
required by the Paperwork Reduction Act of 1995.
DATES: Written comments are encouraged and must be received on or
before February 11, 2019.
ADDRESSES: You may submit comments, identified by Docket No. [CFPB-
2018-0042], by any of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
Email: [email protected]. Include Docket
No. [CFPB-2018-0042] in the subject line of the email.
Mail/Hand Delivery/Courier: Comment Intake, Bureau of
Consumer Financial Protection, 1700 G Street NW, Washington, DC 20552.
Instructions: All submissions should include the agency name and
docket number. Because paper mail in the Washington, DC area and at the
Bureau is subject to delay, commenters are encouraged to submit
comments electronically. In general, all comments received will be
posted without change to https://www.regulations.gov. In addition,
comments will be available for public inspection and copying at 1700 G
Street NW, Washington, DC 20552, on official business days between the
hours of 10 a.m. and 5 p.m. Eastern Standard Time. You can make an
appointment to inspect the documents by telephoning (202) 435-7275. All
comments, including attachments and other supporting materials, will
become part of the public record and subject to public disclosure.
Sensitive personal information, such as account numbers or Social
Security numbers, should not be included. Comments generally will not
be edited to remove any identifying or contact information.
FOR FURTHER INFORMATION CONTACT: For additional information about the
proposed Policy, contact Paul Watkins, Assistant Director; Edward
Blatnik, Senior Counsel; Albert Chang, Counsel; Office of Innovation,
at [email protected] or 202-435-7000. If you require this
document in an alternative electronic format, please contact
[email protected].
Documentation prepared in support of the information collection
request is available at www.regulations.gov. Requests for additional
information on the proposed information collection should be directed
to the Bureau of Consumer Financial Protection, Attention: PRA Office,
1700 G Street NW, Washington, DC 20552, (202) 435-9575, or email:
[email protected]. Please do not submit comments to this mailbox.
SUPPLEMENTARY INFORMATION:
I. Background
In section 1021(a) of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank Act), Congress established the
Bureau's statutory purpose as ensuring that all consumers have access
to markets for consumer financial products and services and that
markets for consumer financial products and services are fair,
transparent, and competitive.\1\ Relatedly, the Bureau's objectives
include exercising its authorities under Federal consumer financial law
for the purposes of ensuring that outdated, unnecessary, or unduly
burdensome regulations are regularly identified and addressed in order
to reduce unwarranted regulatory burdens, and that markets for consumer
financial products and services operate transparently and efficiently
to facilitate access and innovation.\2\
---------------------------------------------------------------------------
\1\ 12 U.S.C. 5511(a).
\2\ 12 U.S.C. 5511(b)(3), (5).
---------------------------------------------------------------------------
Congress has given the Bureau a variety of authorities under Title
X of the Dodd-Frank Act and the enumerated consumer laws \3\ that it
can exercise to promote this purpose and these objectives. These
authorities include the authority to permit certain activity by a
particular entity (or entities) by order (including approvals and
exemptions), and discretionary supervision and enforcement
authority.\4\
---------------------------------------------------------------------------
\3\ 12 U.S.C. 5481(12).
\4\ See notes 61, 64-65, infra.
---------------------------------------------------------------------------
Pursuant to the purpose, objectives, and certain of the authorities
listed above, the Bureau proposed its Policy on No-Action Letters in
October 2014 \5\ and finalized it in February 2016 (2016 Policy).\6\
The 2016 Policy provides for the issuance of No-Action Letters
consisting of non-binding staff-level no-action recommendations. The
Bureau has issued only one such No-Action Letter to date.\7\
---------------------------------------------------------------------------
\5\ 79 FR 62118 (Oct. 16, 2014).
\6\ 81 FR 8686 (Feb. 22, 2016).
\7\ See Bureau of Consumer Financial Protection, CFPB Announces
First No-Action Letter to Upstart Network (Sept. 14, 2017),
available at https://www.consumerfinance.gov/about-us/newsroom/cfpb-announces-first-no-action-letter-upstart-network/.
---------------------------------------------------------------------------
II. Summary of the Proposed Policy
In line with the above authority, the Bureau is proposing to revise
the 2016 Policy and proposing the BCFP Product Sandbox through its
proposed Policy on No-Action Letters and the BCFP Product Sandbox
(Policy) in order to more effectively carry out its statutory purpose
and objectives. As noted, the Bureau has provided only one No-Action
Letter under the 2016 Policy. The Bureau believes this strongly
suggests that both the process required to obtain a No-Action Letter
and the relief available under the 2016 Policy have not provided firms
with sufficient incentives to seek No-Action Letters from Bureau staff.
Accordingly, the Bureau is seeking comment on a number of changes to
the 2016 Policy that would address these issues and bring certain
aspects of the Bureau's policy more into alignment with no-action
letter
[[Page 64037]]
programs offered by other Federal regulators. The proposed Policy has
two parts. Part I is a revision of the 2016 Policy designed to increase
the utilization of the Policy and bring certain elements more in line
with similar no-action letter programs offered by other agencies. Part
II is a description of the BCFP Product Sandbox.\8\
---------------------------------------------------------------------------
\8\ The Bureau believes it is necessary and appropriate, and in
the public interest, to include both parts in a single Policy in
order to establish uniform procedures to encourage focused
presentation of issues, ensure expeditious consideration of
applications, and minimize the expenditure of Bureau resources.
---------------------------------------------------------------------------
The proposed Policy has the following overarching goals: (1)
Streamlining the application process; (2) streamlining the Bureau's
processing of applications; (3) expanding the types of statutory and/or
regulatory relief available; \9\ (4) specifying procedures for an
extension where the relief initially provided is of limited duration;
and (5) providing for coordination with existing or future programs
offered by other regulators designed to facilitate innovation.
---------------------------------------------------------------------------
\9\ For convenience, the term ``relief'' will be used
hereinafter to cover relief from statutory and/or regulatory
provisions.
---------------------------------------------------------------------------
Part I: No-Action Letters. In Part I, the Bureau is proposing to
streamline the process of applying for a No-Action Letter by
eliminating several elements it believes to be redundant or unduly
burdensome, such as a commitment to data-sharing.\10\ Similarly, the
Bureau's review of applications for a No-Action Letter would be
streamlined to focus on the quality and persuasiveness of the
application, with particular emphasis on the potential benefits of the
product or service in question for consumers, the extent to which the
applicant identifies and controls for potential risks to consumers, and
the extent to which no-action relief is needed. Because these measures
would be likely to expedite the application and review process, the
Bureau would expect to grant or deny an application within 60 days of
notifying the applicant that the Bureau has deemed the application to
be complete.\11\
---------------------------------------------------------------------------
\10\ Commenters on the proposed 2016 Policy stated that it would
require applicants to submit an unduly burdensome volume of
information. 81 FR 8686, 8689 (Feb. 22, 2016). Stakeholders have
expressed similar concerns subsequent to the finalization of the
2016 Policy.
\11\ In comments on the proposed 2016 Policy, several
stakeholders urged the Bureau to adopt a specific timetable for
granting or denying an application for a No-Action Letter--ranging
from 45 to 90 days--in order to accommodate the rapid development
processes of innovative products and services. 81 FR 6686, 8689
(Feb. 22, 2016).
---------------------------------------------------------------------------
To more closely align Part I with certain aspects of no-action
letter programs offered by other Federal agencies, the Bureau is re-
assessing data-sharing requirements and time-period limitations for No-
Action Letters available under Part I.\12\ In contrast to the 2016
Policy, which requires applicants to commit to sharing data about the
product or service in question, no such data sharing would be expected
under Part I of the proposed Policy. Similarly, whereas one of the
factors Bureau staff will consider in deciding whether to grant an
application for a No-Action Letter under the 2016 Policy is the extent
to which the letter would be limited in duration, the default
assumption under Part I of the proposed Policy would be that No-Action
Letters would have no such temporal limitation.
---------------------------------------------------------------------------
\12\ Many of the proposed revisions are designed to more closely
align Part I with no-action letter programs offered by other Federal
agencies. See, e.g., Securities and Exchange Commission, Procedures
Applicable to Requests for No-Action and Interpretive Letters,
Securities Act Release No. 6269 (Dec. 5, 1980) (available at: https://www.sec.gov/rules/other/33-6269.pdf) (limited application elements;
no temporal limitation; no data-sharing requirements); Commodity
Futures Trading Commission, Requests for Exemptive, No-Action and
Interpretative Letters, 17 CFR 140.99 (same); Federal Housing
Finance Agency, 12 CFR 1211.1, 1211.4, 1211.6 (same); Federal Energy
Regulatory Commission, Informal Staff Advice on Regulatory
Requirements; Interpretive Order Regarding No-Action Letter Process,
70 FR 71487 (Nov. 29, 2005) (same).
---------------------------------------------------------------------------
Under the 2016 Policy, a No-Action letter is a staff recommendation
of no-action relief. Under Part I of the proposed Policy, in contrast,
No-Action Letters would be issued by duly authorized officials of the
Bureau to provide recipients greater assurance that the Bureau itself
stands behind the no-action relief provided by the letters. Whereas
UDAAP-focused No-Action Letters were expected to be particularly
uncommon under the 2016 Policy, there would be no such expectation
under Part I of the proposed Policy.\13\
---------------------------------------------------------------------------
\13\ Several commenters on the proposed 2016 Policy urged the
Bureau not to exclude UDAAP-focused No-Action Letters on the grounds
that no-action relief is particularly valuable for UDAAP matters. 81
FR 6686, 8688 (Feb. 22, 2016). Stakeholders have reiterated this
view subsequent to the finalization of the 2016 Policy, including in
comments submitted in response to the Bureau's Request for
Information Regarding Bureau Guidance and Implementation Support. 83
FR 13959 (Apr. 20, 2018).
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Finally, Part I would include a new section concerning Bureau
coordination with other regulators that offer no-action letters or
similar forms of relief.\14\
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\14\ The Bureau has also made a number of technical changes to
accommodate the above-described substantive revisions and to
increase clarity.
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Part II: BCFP Product Sandbox. The 2016 Policy is limited to a
single type of relief: Non-binding staff-level no-action
recommendations. In comments on the proposed 2016 Policy, the Bureau
was urged to provide types of relief that are legally binding on the
Bureau as well as other parties. In its response to such comments, the
Bureau stated that ``experience with the NAL process will assist the
Bureau in evaluating other potential'' forms of relief.\15\ As noted,
the Bureau has provided only one No-Action Letter under the 2016 Policy
since it was finalized in February 2016, which strongly suggests that
the relief available under the 2016 Policy has not provided firms with
a sufficient incentive to seek No-Action Letters from Bureau staff. In
view of this experience, the Bureau is proposing to create the BCFP
Product Sandbox. The BCFP Product Sandbox would include no-action
relief substantially the same as that available under Part I, as well
as two forms of additional relief: (a) Approvals by order under three
statutory safe harbor provisions \16\ (approval relief); and (b)
exemptions by order (i) from statutory provisions (as well as
provisions of regulations implementing the statute in question) under
statutory exemption-by-order provisions (statutory exemptions); \17\ or
(ii) from regulatory provisions that do not mirror statutory provisions
under rulemaking authority or other general authority (regulatory
exemptions).\18\
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\15\ 81 FR 8686, 8688 (Feb. 22, 2016).
\16\ See note 61, infra.
\17\ See note 64, infra.
\18\ See note 65, infra. Collectively, statutory exemptions and
regulatory exemptions are referred to in the Policy as exemption
relief.
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In keeping with the ``sandbox'' concept, approval relief and
exemption relief would be provided for a limited period of time. The
Bureau expects that two years would be appropriate in most cases.\19\
Part II of the proposed Policy also includes a section regarding
extensions for participation in the BCFP Product Sandbox, which would
specify the procedures for applying for such an extension and clarify
the Bureau's intention to grant such applications where there is
evidence of consumer benefit and an absence of consumer harm.
Similarly, in contrast to Part I, Part II would require applicants to
commit to sharing data with the Bureau concerning the products or
services offered or provided in the BCFP Product Sandbox.
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\19\ Like the no-action relief available under Part II, the no-
action relief available under Part II would not have a limited
duration.
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Finally, like Part I, Part II would have a streamlined application
and review process, and the Bureau would expect to grant or deny an
application within 60 days of notifying the applicant that the Bureau
has deemed the application to
[[Page 64038]]
be complete. It would also include a similar provision concerning
Bureau coordination with other regulators that offer similar programs
designed to facilitate innovation.
The Bureau invites comments with respect to any aspect of the
proposed Policy. The Bureau is particularly interested in comment on
the scope of the grounds for revocation, including whether there are
additional changes in law that should be included as grounds for
revocation.
III. Regulatory Requirements
The Bureau has concluded that, if finalized, this Policy Guidance
would constitute an agency general statement of policy and a rule of
agency organization, procedure, or practice exempt from the notice and
comment rulemaking requirements under the Administrative Procedure Act,
pursuant to 5 U.S.C. 553(b). The Policy is intended to provide
information regarding the Bureau's plans to exercise its discretion to
provide no-action, approval, and exemption relief, and to describe the
procedural components of such discretion. The Policy does not impose
any legal requirements on third parties, nor does it create or confer
any substantive rights on third parties that could be enforceable in
any administrative or civil proceeding. Because no notice of proposed
rulemaking is required, the Regulatory Flexibility Act does not require
an initial or final regulatory flexibility analysis.\20\
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\20\ 5 U.S.C. 603(a), 604(a).
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IV. Paperwork Reduction Act
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et
seq.), Federal agencies are generally required to seek the Office of
Management and Budget (OMB) approval for information collection
requirements prior to implementation. Further, the Bureau may not
conduct or sponsor a collection of information unless OMB approves the
collection under the PRA and it displays a currently valid OMB control
number. Notwithstanding any other provision of law, no person is
required to comply with, or is subject to penalty for failure to comply
with, a collection of information if the collection instrument does not
display a currently valid OMB control number. OMB has previously
approved the collections of information contained in the Bureau's
current Policy on No-Action Letters. The OMB Number is 3170-0059
(Expiration Date: 02/28/2019). The Bureau has determined that certain
proposed revisions to the Policy would result in material changes from
what has been previously approved by OMB; therefore, the Bureau plans
to submit a request to OMB seeking approval for the revised information
collections as contained in this proposed revised Policy.
As part of its continuing effort to reduce paperwork and respondent
burden, the Bureau conducts a preclearance consultation program to
provide the general public and Federal agencies with an opportunity to
comment on the new information collection requirements in accordance
with the PRA (See 44 U.S.C. 3506(c)(2)(A)). This helps ensure that: The
public understands the Bureau's requirements or instructions,
respondents can provide the requested data in the desired format,
reporting burden (time and financial resources) is minimized,
collection instruments are clearly understood, and the Bureau can
properly assess the impact of collection requirements on respondents.
The Proposed Policy contains revised information collection
requirements which consist of the information that should be submitted
in applications for admission to the BCFP Product Sandbox as described
below in Section II.B. Documentation prepared in support of this
information collection request is available at www.regulations.gov.
Requests for additional information and comments regarding the proposed
revised collection of information should be submitted as described in
the ADDRESSES section of this document.
Comments are invited on: (a) Whether the collection of information
is necessary for the proper performance of the functions of the Bureau,
including whether the information will have practical utility; (b) The
accuracy of the Bureau's estimate of the burden of the collection of
information, including the validity of the methods and the assumptions
used; (c) Ways to enhance the quality, utility, and clarity of the
information to be collected; and (d) Ways to minimize the burden of the
collection of information on respondents, including through the use of
automated collection techniques or other forms of information
technology. Comments submitted in response to this document will be
summarized and/or included in the request for Office of Management and
Budget (OMB) approval. All comments will become a matter of public
record.
V. Proposed Policy
The text of the proposed Policy is as follows:
Policy on No-Action Letters and the BCFP Product Sandbox
In section 1021(a) of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank Act), Congress established the
Bureau of Consumer Financial Protection's (Bureau's) statutory purpose
as ensuring that all consumers have access to markets for consumer
financial products and services and that markets for consumer financial
products and services are fair, transparent, and competitive.\21\
Relatedly, the Bureau's objectives include exercising its authorities
under Federal consumer financial law for the purposes of ensuring that
outdated, unnecessary, or unduly burdensome regulations are regularly
identified and addressed in order to reduce unwarranted regulatory
burdens, and that markets for consumer financial products and services
operate transparently and efficiently to facilitate access and
innovation.\22\
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\21\ 12 U.S.C. 5511(a).
\22\ 12 U.S.C. 5511(b)(3), (5).
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Congress has given the Bureau a variety of authorities under Title
X of the Dodd-Frank Act and the enumerated consumer laws \23\ that it
can exercise to promote this purpose and these objectives. These
authorities include the authority to permit certain activity by a
particular entity (or entities) by order (including approvals and
exemptions), and discretionary supervision and enforcement
authority.\24\ Providing such types of relief may not only benefit
consumers and entities that offer or provide consumer financial
products or services; it may also inform the Bureau's exercise of other
authorities with respect to such products or services, such as market
monitoring and rulemaking.
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\23\ 12 U.S.C. 5481(12).
\24\ See notes 26, 61, 64-65, infra.
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The Policy on No-Action Letters and the BCFP Product Sandbox
(Policy) sets forth the Bureau's policy and procedures regarding (i)
issuance of No-Action Letters; and (ii) admission to the BCFP Product
Sandbox, which involves issuance of (a) approvals by order and/or
exemptions by order, and (b) no-action relief. The Policy's main
purpose is to provide a mechanism through which the Bureau may more
effectively carry out its statutory purpose and objectives.\25\
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\25\ The Policy is not intended to, nor should it be construed
to: (1) Restrict or limit in any way the Bureau's discretion in
exercising its authorities; (2) constitute an interpretation of law;
or (3) create or confer upon any covered person or consumer, any
substantive or procedural rights or defenses that are enforceable in
any manner. In contrast, a particular No-Action Letter involves the
Bureau's exercise of its supervision and enforcement discretion in a
particular manner, and a particular approval or exemption gives the
recipient certain legal rights.
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[[Page 64039]]
The Policy has two parts: (I) No-Action Letters; (II) the BCFP
Product Sandbox. The Bureau considers Part I and Part II to be mutually
exclusive.
Part I. No-Action Letters
This part consists of six sections:
Section A describes No-Action Letters.
Section B describes information that should be included in
applications for a No-Action Letter.
Section C lists factors the Bureau intends to consider in
deciding whether to grant an application for a No-Action Letter.
Section D describes the Bureau's procedures for issuing
No-Action Letters.
Section E describes how the Bureau intends to coordinate
with other regulators with respect to No-Action Letters.
Section F describes Bureau disclosure of information about
No-Action Letters.
A. Description of No-Action Letters
A No-Action Letter under Part I is a document provided to a
particular entity or entities, based on particular facts and
circumstances, through which the Bureau exercises its discretionary
supervision and enforcement authority by providing no-action
relief.\26\ The Bureau intends that a No-Action Letter will include a
statement that, subject to good faith, substantial compliance with the
terms and conditions of the letter, and in the exercise of its
discretion, the Bureau will not make supervisory findings or bring a
supervisory or enforcement action against the recipient predicated on
the recipient's offering or providing the described aspects of the
product or service \27\ under (a) its authority to prevent unfair,
deceptive, or abusive acts or practices; \28\ or (b) any other
identified statutory or regulatory authority within the Bureau's
jurisdiction.\29\ The Bureau intends that a No-Action Letter will also
include a statement that the letter is limited to the recipient's (or
recipients') offering or providing the described aspects of the product
or service, and that it does not apply to the recipient's (or
recipients') offering or providing different aspects of the product or
service.\30\ \31\
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\26\ See 12 U.S.C. 5561 et seq. (enforcement authority); 12
U.S.C. 5531(a) (UDAAP enforcement authority); 12 U.S.C. 5514, 5515
(supervision authority); 12 U.S.C. 5511(a) (``The Bureau shall seek
to implement and, where applicable, enforce Federal consumer
financial law . . .'') (emphasis added); Heckler v. Chaney, 470 U.S.
821, 832 (1985); see also 12 U.S.C. 5512(b)(1) (authorizing the
Director of the Bureau to ``issue . . . guidance as may be necessary
or appropriate to enable the Bureau to administer and carry out the
purposes and objectives of the Federal consumer financial laws, and
to prevent evasions thereof'').
\27\ For convenience, ``described aspects of the product or
service'' is used in Part I to capture the subject matter scope of a
No-Action Letter, including both the particular aspects of the
product or service in question, and the particular manner in which
it is offered or provided.
\28\ Implicit in the statement under part (a) is that the Bureau
has not determined that the acts or practices in question are
unfair, deceptive, or abusive.
\29\ The Bureau maintains the right to obtain information
relating to the consumer financial product or service subject to a
No-Action Letter under its applicable supervision and enforcement
authorities.
\30\ For example, if only written disclosures were included
within the scope of a No-Action Letter, marketing representations
made orally by call center representatives could nevertheless be
subject to supervisory or enforcement action.
\31\ Additional content the Bureau expects to be included in No-
Action Letters is specified in Section I.D.
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B. Submitting Applications for No-Action Letters
Applications for a No-Action Letter should include the following:
1. The identity of the entity or entities applying for a No-Action
Letter;
2. A description of the consumer financial product or service in
question, including (a) how the product or service functions, and the
terms on which it will be offered; and (b) the manner in which it is
offered or provided, including any consumer disclosures;
3. An explanation of the potential consumer benefits of the product
or service and/or the manner in which it is offered or provided;
4. An explanation of the potential consumer risks posed by the
product or service and/or the manner in which it is offered or
provided, and how the applicant(s) intends to mitigate such risks;
5. An identification of the statutory and/or regulatory provisions
from which the applicant(s) seeks no-action relief and an
identification of the potential uncertainty, ambiguity, or barrier that
such relief would address; \32\
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\32\ Applicants should describe the relevant provisions with as
much specificity as practicable, in part to enable the Bureau to
respond expeditiously to the application. The Bureau recognizes that
in some cases it may be difficult to determine precisely which
provisions would apply, in the normal course, to the product or
service in question. In other cases, the applicant may lack the
legal resources to make a fully precise determination. In such
circumstances, the applicant should provide the maximum
specification practicable under the circumstances and explain the
limits on further specification.
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6. If an applicant(s) wishes to request confidential treatment
under the Freedom of Information Act,\33\ the Bureau's rule on
Disclosure of Records and Information,\34\ or other applicable law,
this request and the basis therefor should be included in a separate
letter and submitted with the application.\35\ Applicants are advised
to specifically identify the information for which confidential
treatment is requested, and may reference the Bureau's intentions
regarding confidentiality under Section I.F; and
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\33\ 5 U.S.C. 552.
\34\ 12 CFR part 1070.
\35\ Applicants should describe the relevant legal bases for
confidentiality with as much specificity as practicable. The Bureau
recognizes that some applicants may lack the legal resources to
provide a detailed and complete showing. In such circumstances, the
applicant should provide the maximum specification practicable under
the circumstances and explain the limits on further specification.
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7. If an applicant(s) wishes the Bureau to coordinate with other
regulators, the applicant(s) should identify those regulators,
including but not limited to those that have been contacted about
offering or providing the product or service in question.\36\
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\36\ Depending on the extent of coordination requested, the
Bureau many not be able to respond to the application within the
time frame specified in Section I.C.
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The Bureau invites applications from trade associations, service
providers,\37\ and other third-parties. A trade association may wish to
apply for a No-Action Letter on behalf of one or more of its members.
Similarly, a service provider may wish to apply for a No-Action Letter
covering business relationships with existing or prospective clients.
In either case, the third-party applicant may be unable to describe all
entities interested in a No-Action Letter. The third-party applicant
may also have difficulty submitting a complete application without
specific knowledge of the business practices of every entity interested
in a No-Action Letter.
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\37\ The term ``service provider'' is generally defined in
section 1002(26) of the Dodd-Frank Act as ``any person that provides
a material service to a covered person in connection with the
offering or provision by such covered person of a consumer financial
product or service.'' 12 U.S.C. 5481(26). Some potential service
providers may be unable to submit an application for a No-Action
Letter without entering into a business relationship that enables
them to provide a material service to a covered person. At the same
time, a service provider may be unable to enter into such a business
relationship absent appropriate relief.
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A trade association, service provider, or other third-party
applicant should endeavor to submit a complete application. However, if
a third-party applicant is unable to submit a complete application,\38\
the Bureau may issue a
[[Page 64040]]
provisional No-Action Letter subject to submission of additional
information and the Bureau's subsequent issuance of a non-provisional
No-Action Letter. Based on a review of this additional information, a
non-provisional No-Action Letter may be issued to the third-party and/
or the entity (or entities) described by the third-party. Additional
entities described by the third-party applicant may receive the letter
at the same or later time by informing the Bureau that they wish to
receive the letter and providing the necessary information.
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\38\ For example, although a third-party should endeavor to
identify all other entities jointly interested in pursuing an
application, it may not be able to identify all such entities by
name at the time of the application. In such cases, the third-party
applicant could describe the type of other entity it wishes to
receive a No-Action Letter.
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Applications may be submitted via email to:
[email protected] or through other means designated by the
Office of Innovation.\39\ Submitted applications may be withdrawn at
any time. Potential applicants are encouraged to contact the Office of
Innovation at the same email address for informal preliminary
discussion of a contemplated proposal prior to submitting a formal
application.\40\
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\39\ Except as provided in Section I.B, applications should not
include any PII.
\40\ The email subject line should begin: ``No-Action Letter--
Inquiry.''
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C. Bureau Assessment of Applications for No-Action Letters
In deciding whether to grant an application for a No-Action Letter,
the Bureau intends to consider the quality and persuasiveness of the
application, with particular emphasis on the information specified in
subsections I.B.3, I.B.4, and I.B.5.\41\
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\41\ The decision whether to grant an application for a No-
Action Letter will be within the Bureau's sole discretion.
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The Bureau intends to grant or deny an application within 60 days
of notifying the applicant that the Bureau has deemed the application
to be complete.
D. Bureau Procedures for Issuing No-Action Letters
When the Bureau decides to grant an application for a No-Action
Letter, it intends to provide the recipient(s) with a No-Action Letter
signed by the Assistant Director of the Office of Innovation or other
members of the Office of Innovation, duly authorized by the Bureau,
that sets forth the specific terms and conditions of the no-action
relief provided.\42\ The Bureau expects the No-Action Letter will:
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\42\ If the Bureau decides to deny an application, it will
inform the applicant(s) of its decision. The Bureau intends to
respond to reasonable requests to reconsider its denial of an
application within 60 days of such requests. Applicants may also
withdraw, modify, and re-submit applications at any time.
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1. Identify the recipient(s);
2. Specify the subject matter scope of the letter, i.e., the
described aspects of the product or service;
3. State that the letter is limited to the recipient's (or
recipients') offering or providing the described aspects of the product
or service, and that it does not apply to the recipient's (or
recipients') offering or providing different aspects of the product or
service;
4. State that the letter is limited to the recipient(s), and that
it does not apply to any other persons or entities;
5. Require the recipient(s) to inform the Bureau of material
changes to information included in the application that would
materially increase the risk of material, tangible harm to consumers;
6. Specify any other limitations or conditions, and the extent that
the Bureau intends to publicly disclose information about the No-Action
Letter; \43\
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\43\ If an applicant(s) objects to the disclosure of certain
information and the Bureau insists that the information must be
publicly disclosed if a No-Action Letter is issued, the applicant(s)
may withdraw the application and the Bureau intends to treat all
information related to the application as confidential to the full
extent permitted by law.
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7. State that, subject to good faith, substantial compliance with
the terms and conditions of the letter, and in the exercise of its
discretion, the Bureau will not make supervisory findings or bring a
supervisory or enforcement action against the recipient(s) predicated
on the recipient's (or recipients') offering or providing the described
aspects of the product or service under (a) its authority to prevent
unfair, deceptive, or abusive acts or practices; \44\ or (b) any other
identified statutory or regulatory authority within the Bureau's
jurisdiction.\45\
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\44\ Implicit in the statement under part (a) is that the Bureau
has not determined that the acts or practices in question are
unfair, deceptive, or abusive.
\45\ A No-Action Letter permits the Bureau to exercise its
supervision and enforcement authorities with respect to the
recipient's (or recipients') conduct outside the scope of the No-
Action Letter.
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8. State that, if the No-Action Letter is revoked for a reason
other than the recipient's (or recipients') failure to substantially
comply in good faith with the terms and conditions of the letter, the
revocation is prospective only; i.e., that the Bureau would not pursue
an action to impose retroactive liability in such circumstances.
In certain circumstances, the Bureau may revoke the No-Action
Letter in whole or in part. Based, in part, on its knowledge of no-
action letter programs operated by other Federal agencies, the Bureau
anticipates revocation to be quite rare. The Bureau expects the No-
action Letter to specify the grounds of revocation, which the Bureau
anticipates will be: (i) Failure to substantially comply in good faith
with the terms and conditions of the letter; (ii) a determination by
the Bureau that the recipient's (or recipients') offering or providing
the described aspects of the product or service is causing material,
tangible, harm to consumers; and (iii) a determination by the Bureau
that the legal uncertainty, ambiguity, or barrier that was the basis
for grant of a No-Action Letter has changed as a result of as statutory
change or a Supreme Court decision.
Before revoking a No-Action Letter, the Bureau will notify the
recipient(s) of the grounds for revocation, and permit an opportunity
to respond within a reasonable period of time. If the Bureau determines
that the recipients(s) failed to substantially comply in good faith
with the terms and conditions of the No-Action Letter, it will offer
the recipient(s) an opportunity to cure the failure within a reasonable
period of time before revoking the No-Action Letter. If the Bureau
revokes or partially revokes a No-Action Letter, it will do so in
writing and it will specify the reason(s) for its decision. The Bureau
intends to allow the recipient(s) to wind-down the offering or
providing of the describe aspects of the product or service during an
appropriate period after revocation, unless the revocation was based
upon the product or service causing material, tangible harm to
consumers and a wind-down period would increase such harm.
E. Regulatory Coordination
Section 1015 of the Dodd-Frank Act instructs the Bureau to
coordinate with Federal agencies and State regulators, as appropriate,
to promote consistent regulatory treatment of consumer financial and
investment products and services.\46\ Similarly, section 1042(c) of the
Dodd-Frank Act instructs the Bureau to provide guidance in order to
further coordinate actions with the State attorneys general and other
regulators.\47\ Such coordination includes coordinating in
circumstances where other regulators have chosen to limit their
enforcement or other regulatory authority. The Bureau is interested in
entering into agreements with State authorities that issue similar
forms of no-action relief that would provide for an alternative means
of receiving a No-Action Letter from the Bureau, i.e.,
[[Page 64041]]
alternative to the process described in Sections I.B, I.C, and I.D.
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\46\ 12 U.S.C. 5495.
\47\ 12 U.S.C. 5552(c).
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Furthermore, the Bureau wishes to coordinate with other regulators
more generally. To this end, the Bureau intends to enter into
agreements whenever practicable to coordinate relief under Part I with
similar forms of relief offered by State, Federal, or international
regulators.
F. Bureau Disclosure of Information Regarding No-Action Letters
The Bureau intends to publish No-Action Letters on its website, as
well as, in appropriate cases, a version or summary of the application.
The Bureau also may publish denials of applications on its website,
including an explanation of why the application was denied,
particularly if it determines that doing so would be in the public
interest.\48\
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\48\ The Bureau intends to publish denials only after the
applicant is given an opportunity to request reconsideration of the
denial. Upon request, and to the extent permitted by law, the Bureau
does not intend to release identifying information from published
denials, and intends to redact such information from the denials
published on its website.
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Public disclosure of any other information regarding No-Action
Letters is governed by applicable law, including the Dodd-Frank
Act,\49\ the Freedom of Information Act (FOIA),\50\ and the Bureau's
rule on Disclosure of Records and Information (Disclosure Rule).\51\
The Disclosure Rule generally prohibits the Bureau from disclosing
confidential information,\52\ and defines confidential information to
include information that may be exempt from disclosure under the FOIA
\53\--including Exemption 4 regarding trade secrets and confidential
commercial or financial information that is privileged or
confidential.\54\ The Disclosure Rule defines confidential supervisory
information to include any information provided to the Bureau by a
financial institution to enable the Bureau to monitor for risks to
consumers in the offering or provision of consumer financial products
or services.\55\ Relatedly, the Disclosure Rule defines business
information as commercial or financial information obtained by the
Bureau from a submitter that may be protected from disclosure under
Exemption 4 of FOIA, and generally provides that such business
information shall not be disclosed pursuant to a FOIA request except in
accordance with section 1070.20 of the rule.\56\
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\49\ See, e.g., 12 U.S.C. 5512(c)(8).
\50\ 5 U.S.C. 552.
\51\ 12 CFR part 1070.
\52\ 12 CFR 1070.41.
\53\ 12 CFR 1070.2(f).
\54\ 5 U.S.C. 552(b)(4).
\55\ 12 CFR 1070.2(i)(1)(iv).
\56\ 12 CFR 1070.20(a), (b).
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The Bureau anticipates that much of the information submitted by
applicants in their applications, and by recipients during the pendency
of the No-Action Letter, will qualify as confidential information,
which may include confidential supervisory information and/or business
information, under the Disclosure Rule.\57\ In particular, information
requested from applicants under subsections I.B.3, I.B.4, and I.B.5 is
designed to enable the Bureau to assess potential risks to consumers
posed by a No-Action Letter. Similarly, under subsection I.D.5, the
Bureau is requiring notification of material changes to any application
information to enable the Bureau to monitor for risks during the
pendency of a No-Action Letter. Therefore, the Bureau expects that much
of the information submitted that is responsive to subsections I.B.3,
I.B.4, I.B.5, and I.D.5 may constitute confidential supervisory
information since it is obtained, in part, for the purpose of
monitoring for risks to consumers. Additionally, the Bureau expects
that much of the information submitted that is responsive to subsection
I.B.2 will constitute business information. The Bureau expects that it
may also constitute confidential supervisory information, since
understanding the nature of the applicant's product or service and the
manner in which it is offered or provided is essential for the Bureau
to monitor for risks to consumers.\58\
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\57\ To the extent associated communications include the same
information, that information would have the same status. But other
information in associated communications may be subject to
disclosure.
\58\ To the extent an applicant or recipient submits information
in connection with any of the identified subsections that is not
actually responsive to these subsections, such information may be
subject to disclosure.
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Disclosure of information or data provided to the Bureau under the
Policy to other Federal and State agencies is governed by applicable
law, including the Dodd-Frank Act \59\ and the Bureau's Disclosure
Rule, and subject to Bureau Bulletin 12-01.\60\ This includes
disclosure consistent with Memoranda of Understanding (MOUs) the Bureau
has with other Federal and State agencies. For example, under certain
MOUs with other Federal agencies, the Bureau has agreed to provide CSI
to those agencies.
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\59\ See, e.g., 15 U.S.C. 5512(c)(6); 5514(b)(3); 5515(b)(2);
5516(c)(2); 5516(d)(2).
\60\ Available at: https://files.consumerfinance.gov/f/2012/01/GC_bulletin_12-01.pdf.
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To the extent the Bureau wishes to publicly disclose non-
confidential information regarding a No-Action Letter, the terms of
such disclosure will be included in the letter. The Bureau intends to
draft the No-Action Letter in a manner such that confidential
information is not disclosed. Consistent with applicable law and its
own rules, the Bureau will not seek to publicly disclose any
information that would conflict with consumers' privacy interests.
Part II. BCFP Product Sandbox
This part consists of seven sections:
Section A describes the three types of relief available to
participants in the BCFP Product Sandbox.
Section B describes information that should be included in
applications for admission to the BCFP Product Sandbox.
Section C lists factors the Bureau intends to consider in
deciding whether to grant an application for admission to the BCFP
Product Sandbox.
Section D describes procedures for granting admission to
the BCFP Product Sandbox.
Section E describes procedures for granting extensions of
participation in the BCFP Product Sandbox.
Section F describes how the Bureau intends to coordinate
with other regulators with respect to the BCFP Product Sandbox.
Section G describes Bureau disclosure of information about
the BCFP Product Sandbox.
A. Types of Relief Available to Participants in the BCFP Product
Sandbox
1. Approvals
An approval under Part II is relief provided by the Bureau to a
particular entity or entities, based on particular facts and
circumstances, under one or more of three statutory safe harbor
provisions.\61\ An approval issued to a particular entity or entities
will include (a) a statement that, subject to good faith compliance
with specified terms and conditions, the Bureau approves the
recipient's (or recipients') offering or providing the described
aspects of the product or service; \62\ and (b) a specification of the
legal authority and
[[Page 64042]]
rational basis for the Bureau's issuance of the approval.
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\61\ 15 U.S.C. 1640(f) (TILA); 15 U.S.C. 1691e(e) (ECOA); 15
U.S.C. 1693m(d) (EFTA).
\62\ For convenience, ``described aspects of the product or
service'' is used in Part II to capture the subject matter scope of
admission to the BCFP Product Sandbox and the attendant relief,
including both the particular aspects of the product or service in
question, and the particular manner in which it is offered or
provided.
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By operation of the applicable statutory provision(s), the
recipient would have a ``safe harbor'' from liability under the
applicable statute(s) to the fullest extent permitted by these
provisions as to any act done or omitted in good faith in conformity
with the approval; i.e., the recipient would be immune from enforcement
actions by any Federal or State authorities, as well as from lawsuits
brought by private parties.\63\
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\63\ 15 U.S.C. 1640(f); 15 U.S.C. 1691e(e); 15 U.S.C. 1693m(d).
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2. Exemptions
An exemption under Part II is relief provided to a particular
entity or entities, based on particular facts and circumstances,
through which the Bureau exercises its authority to grant exemptions by
order (i) from statutory provisions (as well as provisions of
regulations implementing the statute in question) under statutory
exemption-by-order provisions (statutory exemptions); \64\ or (ii) from
regulatory provisions that do not mirror statutory provisions under
rulemaking authority or other general authority (regulatory
exemptions).\65\ An exemption issued to a particular entity or entities
will include (a) a statement that, subject to good faith compliance
with specified terms and conditions, the Bureau exempts the
recipient(s) from complying with or deems it to be in compliance with
specified statutory or regulatory provisions in connection with its
offering or providing the described aspects of the product or service;
and (b) a specification of the legal authority and rational basis for
the Bureau's issuance of the exemption.
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\64\ See, e.g., 15 U.S.C. 1691c-2(g)(2) (ECOA); 15 U.S.C.
1639(p)(2) (HOEPA); 12 U.S.C. 1831t(d) (FDIA). Any exemption issued
by the Bureau pursuant to such statutory authority will satisfy any
applicable statutory requirements.
\65\ See, e.g., United States v. Allegheny-Ludlum Steel Corp.,
406 U.S. 742, 755 (1972) (``It is well established that an agency's
authority to proceed in a complex area . . . by means of rules of
general application entails a concomitant authority to provide
exemption procedures in order to allow for special
circumstances.''); Brodsky v. U.S. Nuclear Regulatory Comm'n, 783 F.
Supp. 2d 448 (S.D.N.Y. 2011) (same); 15 U.S.C. 5512(b)(1)
(authorizing the Director of the Bureau to ``prescribe rules and
issue orders and guidance as may be necessary or appropriate to
enable the Bureau to administer and carry out the purposes and
objectives of the Federal consumer financial laws, and to prevent
evasions thereof'').
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Where the Bureau provides such an exemption to a recipient(s), the
recipient(s) would be immune from enforcement actions by any Federal or
State authorities, as well as from lawsuits brought by private parties,
based on the relevant statutory or regulatory provisions and on the
recipient's (or recipients') offering or providing the described
aspects of the product or service.\66\
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\66\ See, e.g., 15 U.S.C. 5532(e) (exemption from a rule or
enumerated consumer law issued by the Bureau constitutes a safe
harbor from liability); Williams v. Chartwell Fin. Servs., Ltd., 204
F.3d 748, 754 (7th Cir. 2004) (exemption effectively provides a safe
harbor from liability).
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3. No-Action Relief
The no-action relief available under Part II is substantially the
same as the no-action relief available under Part I, including not
having a limited duration.\67\
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\67\ Although the no-action relief itself is substantially the
same under Part I and Part II, potential applicants should keep in
mind other differences between Part I and Part II when deciding
whether to apply for a No-Action Letter under Part I, or for
admission to the BCFP Product Sandbox under Part II, such as
differences in data sharing expectations.
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B. Submitting Applications for Admission to the BCFP Product Sandbox
An application for admission to the BCFP Product Sandbox should
include the following:
1. The identity of the entity or entities applying for admission to
the BCFP Product Sandbox;
2. A description of the consumer financial product or service to be
offered or provided within the BCFP Product Sandbox, including (a) how
the product or service functions, and the terms on which it will be
offered; and (b) the manner in which it is offered or provided to
consumers, including any consumer disclosures;
3. The requested duration of participation in the BCFP Product
Sandbox,\68\ and a description of any other limitations on
participation, such as limits on the volume of transactions, the number
of consumers to which the product or service is to be offered or
provided, or geographic scope;
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\68\ The Bureau expects that two years will be an appropriate
duration in most cases. As indicated in subsection II.A.3, the no-
action relief available under Part II, like the no-action relief
available under Part I, can be of unlimited duration. The
``requested duration of participation in the BCFP Product Sandbox''
element pertains only to approval relief and exemption relief.
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4. An explanation of the potential consumer benefits of the product
or service and/or the manner in which it is offered or provided, and
suggested metrics for evaluating whether such benefits are realized,
such as consumer utilization numbers;
5. An explanation of the potential consumer risks posed by the
product or service and/or the manner in which it is offered or
provided, and how the applicant(s) intends to mitigate such risks,
including any plans for addressing unanticipated consumer harms and the
amount of resources available to provide restitution for material,
quantifiable, economic harm to consumers caused by the applicant's (or
applicants') offering or providing the product or service;
6. An identification of the statutory and regulatory provisions
from which the applicant(s) seeks relief, the type of relief sought
(approval, exemption, and/or no-action relief), and an identification
of the potential uncertainty, ambiguity or barrier that such relief
would address; 69 70
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\69\ Applicants should describe the relevant provisions with as
much specificity as practicable, in part to enable the Bureau to
respond expeditiously to the application. The Bureau recognizes that
in some cases it may be difficult to determine precisely which
provisions would apply, in the normal course, to the product or
service in question. In other cases, the applicant may lack the
legal resources to make a fully precise determination. In such
circumstances, the applicant should provide the maximum
specification practicable under the circumstances and explain the
limits on further specification.
\70\ If an applicant(s) seeks an exemption under statutes that
permit the Bureau to issue exemptions by order provided certain
standards are satisfied, the applicant(s) should explain how the
relevant standards are satisfied.
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7. A description of data the applicant(s) possesses and/or intends
to develop pertaining to the impact of the product or service on
consumers that will be shared with the Bureau if the application is
granted,\71\ and a proposed schedule for sharing this data with the
Bureau;
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\71\ The data the applicant expects to share with the Bureau
should be limited to aggregate data.
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8. If an applicant(s) wishes to request confidential treatment
under the Freedom of Information Act,\72\ the Bureau's rule on
Disclosure of Records and Information,\73\ or other applicable law,
this request and the basis therefor should be included in a separate
letter and submitted with the application.\74\ Applicants are advised
to specifically identify the information for which confidential
treatment is requested; and
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\72\ 5 U.S.C. 552.
\73\ 12 CFR part 1070.
\74\ Applicants should describe the relevant legal bases for
confidentiality with as much specificity as practicable. The Bureau
recognizes that some applicants may lack the legal resources to
provide a detailed and complete showing. In such circumstances, the
applicant should provide the maximum specification practicable under
the circumstances and explain the limits on further specification.
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9. If an applicant(s) wishes the Bureau to coordinate with other
regulators, the applicant(s) should identify those regulators,
including but not limited to those that have been contacted about
[[Page 64043]]
offering or providing the product or service in question.\75\
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\75\ Depending on the extent of coordination requested, the
Bureau many not be able to respond to the application within the
time frame specified in Section II.C.
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The Bureau invites applications from trade associations, service
providers,\76\ and other third-parties. A trade association may wish to
apply for admission to the BCFP Product Sandbox on behalf of one or
more of its members. Similarly, a service provider may wish to apply
for admission to the BCFP Product Sandbox with existing or prospective
clients. In either case, the third-party applicant may be unable to
describe all entities interested in admission to the BCFP Product
Sandbox. The third-party applicant may also have difficulty submitting
a complete application for admission without specific knowledge of the
business practices of every entity interested in admission.
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\76\ The term ``service provider'' is generally defined in
section 1002(26) of the Dodd-Frank Act as ``any person that provides
a material service to a covered person in connection with the
offering or provision by such covered person of a consumer financial
product or service.'' 12 U.S.C. 5481(26). Some potential service
providers may be unable to submit an application for admission to
the BCFP Product Sandbox without entering into a business
relationship that enables them to provide a material service to a
covered person. At the same time, a service provider may be unable
to enter into such a business relationship absent appropriate
relief.
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A trade association, service provider, or other third-party
applicant should endeavor to submit a complete application. However, if
a third-party applicant is unable to submit a complete application,\77\
the Bureau may grant provisional admission to the BCFP Product Sandbox
subject to submission of additional information and the Bureau's
subsequent grant of non-provisional admission. Based on a review of
this additional information, non-provisional admission may be granted
to the third-party and/or the entity (or entities) described by the
third-party. Additional entities identified by the third-party may be
granted admission at the same or later time by informing the Bureau
that they wish to be granted admission and providing the necessary
information.
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\77\ For example, although a third-party should endeavor to
identify all other entities jointly interested in pursuing an
application, it may not be able to identify all such entities by
name at the time of the application. In such cases, the third-party
applicant could describe the type of other entity it wishes to be
admitted to the BCFP Product Sandbox.
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Applications may be submitted via email to:
[email protected] or through other means designated by the
Office of Innovation.\78\ Submitted applications may be withdrawn at
any time. Potential applicants are encouraged to contact the Office of
Innovation at the same email address for informal preliminary
discussion of a contemplated proposal prior to submitting a formal,
complete application.\79\
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\78\ Except as provided in Section II.B, applications should not
include any PII.
\79\ The email subject line should begin ``BCFP Product
Sandbox--Inquiry.''
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C. Bureau Assessment of Applications for Admission to the BCFP Product
Sandbox
In deciding whether to grant an application for admission to the
BCFP Product Sandbox,\80\ the Bureau intends consider the quality and
persuasiveness of the application, with particular emphasis on the
information specified in subsections II.B.4, II.B.5, and II.B.6.
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\80\ The decision whether to grant an application for admission
to the BCFP Product Sandbox will be within the Bureau's sole
discretion.
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The Bureau intends to grant or deny an application within 60 days
of notifying the applicant that the Bureau has deemed the application
to be complete.
D. Procedures for Granting Admission to the BCFP Product Sandbox
81
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\81\ The procedures specified in Section II.D may be modified
pursuant to coordination efforts with other regulators, as specified
in Section II.F.
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When the Bureau decides to grant an application for admission to
the BCFP Product Sandbox, it intends to provide the recipient(s) with a
document entitled: BCFP Product Sandbox Participation Terms and
Conditions (Terms and Conditions document), that sets forth the terms
and conditions of the recipient's (or recipients') participation in the
BCFP Product Sandbox, including the types and scope of the relief
provided to the recipient(s) during its participation in the Sandbox.
The Terms and Conditions document will be signed by the Assistant
Director of the Office of Innovation or other members of the Office of
Innovation, duly authorized by the Bureau and by an officer of each
recipient.\82\ The Bureau expects the Terms and Conditions document
will:
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\82\ If the Bureau decides to deny an application, it will
inform the applicant(s) of its decision. The Bureau intends to
respond to reasonable requests to reconsider its denial of an
application within 60 days of such requests. Applicants may also
withdraw, modify, and re-submit applications at any time.
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1. Identify the recipient entity or entities;
2. Specify the subject matter scope of the document, i.e., the
described aspects of the product or service;
3. State that the document is limited to the recipient's (or
recipients') offering or providing the described aspects of the product
or service, and that it does not apply to the recipient's (or
recipients') offering or providing different aspects of the product or
service;
4. State that the document is limited to the recipient(s), and that
it does not apply to any other persons or entities;
5. Require the recipient(s) to report information about the effects
of offering or providing the described aspects of the product or
service on complaint patterns, default rates, or similar metrics that
will enable to the Bureau to determine if doing so is causing material,
tangible harm to consumers.
6. Include a commitment by the recipient(s) to compensate consumers
for material, quantifiable, economic harm caused by the recipient's (or
recipients') offering or providing the described aspects of the product
or service within the BCFP Product Sandbox;
7. Specify any other limitations or conditions, such as the
duration of the recipient's (or recipients') participation in the BCFP
Product Sandbox,\83\ the nature and extent of the recipient's (or
recipients') data sharing, and the extent that the Bureau intends to
publicly disclose information about the recipient's (or recipients')
participation in the BCFP Product Sandbox; \84\
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\83\ The Bureau expects two years to be an appropriate duration
in most cases.
\84\ If an applicant(s) objects to the disclosure of certain
information and the Bureau insists that the information must be
publicly disclosed if admission to the BCFP Product Sandbox is to
granted, the applicant(s) may withdraw the application and the
Bureau intends to treat all information related to the application
as confidential to the full extent permitted by law.
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8. (a) State that, subject to good faith compliance with the terms
and conditions of the document, (i) the Bureau approves the recipient's
(or recipients') offering or providing the described aspects of the
product or service, and/or (ii) the Bureau exempts the recipient(s)
from complying with or deems it to be in compliance with specified
statutory or regulatory provisions in connection with its offering or
providing the described aspects of the product or service; and (b)
specify the legal authority \85\ and rational basis for the Bureau's
issuance of the approval and/or exemption.
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\85\ See notes 61, 64-65, supra.
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9. State that, subject to good faith compliance with the terms and
conditions of the document, and in the exercise of its discretion, the
Bureau will not make supervisory findings or bring a supervisory or
enforcement action against the recipient(s) predicated on the
recipient's (or recipients') offering or providing the
[[Page 64044]]
described aspects of the product or service under (a) its authority to
prevent unfair, deceptive, or abusive acts or practices; \86\ or (b)
any other identified statutory or regulatory authority within the
Bureau's jurisdiction.\87\
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\86\ Implicit in the statement under part (a) is that the Bureau
has not determined that doing so is deceptive, unfair, or abusive.
\87\ The relief provided to a participant(s) in the BCFP Product
Sandbox permits the Bureau to exercise its supervision and
enforcement authorities with respect to conduct by the
participant(s) outside the scope of that relief.
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10. State that, if the relief provided pursuant to the document is
revoked for a reason other than the recipient's (or recipients')
failure to comply in good faith with the terms and conditions of the
document, the revocation is prospective only; i.e., that the Bureau
would not pursue an action to impose retroactive liability in such
circumstances.
In certain circumstances, the Bureau may revoke admission to the
BCFP Product Sandbox in whole or in part. Based, in part, on its
knowledge of similar relief programs operated by other Federal
agencies, the Bureau anticipates revocation to be quite rare. The
Bureau expects the Terms and Condition document to specify the grounds
of revocation, which the Bureau anticipates will be: (i) Failure to
comply in good faith with the terms and conditions of the document;
(ii) a determination by the Bureau that the recipient's (or
recipients') offering or providing the described aspects of the product
or service is causing material, tangible harm to consumers; and (iii) a
determination by the Bureau that the legal uncertainty, ambiguity, or
barrier that was the basis for the relief provided has changed as a
result of a statutory change or a Supreme Court decision.
Before issuing a revocation, the Bureau will notify the
recipient(s) of the grounds for revocation, and permit an opportunity
to respond within a reasonable period of time. If the Bureau
nonetheless determines that the recipient(s) failed to comply with the
Terms and Conditions document, it will offer the recipient(s) an
opportunity to cure the failure within a reasonable period of time
before issuing a revocation. If the Bureau issues a revocation for
failure to comply in good faith with the Terms and Conditions document,
it will do so in writing and it will specify the reason(s) for its
decision, including the reason(s) why any attempt to cure was
inadequate. The Bureau intends to allow the recipient(s) to wind-down
the offering or providing of the described aspects of the product or
service during a period of six months after revocation, unless the
revocation was based upon the product or service causing material,
tangible harm to consumers and a wind-down period would increase such
harm.
E. Procedures for Extension of Participation in the BCFP Product
Sandbox
Participants in the BCFP Product Sandbox may apply for an extension
of a specified period of time based upon the quality and persuasiveness
of the data provided to the Bureau under Section II.D. The Bureau
expects to place particular weight on the extent to which the data
shows that the described aspects of the product or service are
benefitting consumers and/or not causing material, tangible harm to
consumers. Such applications for an extension should include the
proposed duration of the extension and should be submitted no later
than 90 days prior to the expiration of the applicant's participation
in the BCFP Product Sandbox.\88\ Alternatively, participants may
reapply by resubmitting the entirety of the information specified in
Section II.B.
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\88\ Assuming the two-year period the Bureau expects to be
appropriate in most cases, the Bureau believes recipients would have
sufficient time to gather evidence supportive of an extension
request. For periods of one year or less, the Bureau may consider an
extension deadline appropriate for the period in question.
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Upon the presentation of persuasive data, the Bureau anticipates
granting such extension applications for a period at least as long as
the period of the applicant's (or applicants') original participation
in the BCFP Product Sandbox. The Bureau anticipates permitting longer
extensions where the Bureau is considering amending applicable
regulatory requirements.\89\ During the time period pending a rule
amendment, the Bureau intends to consider means of providing similar
relief to other covered entities that engage in the same or similar
conduct in offering or providing comparable products.
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\89\ The Bureau's plans regarding rulemaking activity are set
forth in its Semiannual Regulatory Agenda, published in full on
www.reginfo.gov. If the period of an extension were tied to the
Bureau's consideration of amending relevant regulatory provisions
and the Bureau announced it was discontinuing its plans to amend the
provisions in question, the extension period would be adjusted
accordingly, e.g., adjusted to end on a specific date.
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F. Regulatory Coordination
Section 1015 of the Dodd-Frank Act instructs the Bureau to
coordinate with Federal agencies and State regulators, as appropriate,
to promote consistent regulatory treatment of consumer financial and
investment products and services.\90\ Similarly, section 1042(c) of the
Dodd-Frank Act instructs the Bureau to provide guidance in order to
further coordinate actions with the State attorneys general and other
regulators.\91\ Such coordination includes coordinating in
circumstances where other regulators have chosen to limit their
enforcement or other regulatory authority. One method of limiting such
authority is through a State sandbox, or group of State sandboxes, or
other limited scope State authorization program (``State
sandbox'').\92\ The Bureau is interested in entering into agreements
with State authorities that operate or plan to operate a State sandbox
that would provide for an alternative means of admission to the BCFP
Product Sandbox, i.e., alternative to the process described in Sections
II.B, II.C, and II.D.
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\90\ 12 U.S.C. 5495.
\91\ 12 U.S.C. 5552(c).
\92\ The concept of a regulatory sandbox is relatively new and
does not have a precise, generally accepted definition. The term is
used in this Policy to refer to a regulatory structure where a
participant obtains limited or temporary access to a market in
exchange for reduced regulatory barriers to entry or reduced
regulatory uncertainty.
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Furthermore, the Bureau wishes to coordinate with other regulators
more generally. To this end, the Bureau intends to enter into
agreements whenever practicable to coordinate relief under Part II with
similar forms of relief offered by State, Federal, or international
regulators.
G. Bureau Disclosure of Information Regarding the BCFP Product Sandbox
The Bureau intends to publish on its website information about the
BCFP Product Sandbox. For entities admitted to the BCFP Product Sandbox
pursuant to the process specified in Sections II.B, II.C, and II.D, the
information is expected to include: (i) The identity of the entity or
entities admitted to the BCFP Product Sandbox; (ii) the subject matter
scope of its or their participation; \93\ (iii) the duration of its or
their participation; (iv) the types of relief provided to
participant(s); (v) for approvals and/or exemptions, the legal
authority and rational basis for the approval and/or exemption; and
(vi) in appropriate cases, a version or summary of the application.\94\
The Bureau also intends to publish on its website information about
denials of applications submitted pursuant to
[[Page 64045]]
Section B, including an explanation of why the application was
denied.\95\
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\93\ See subsection II.D.2, supra.
\94\ The Bureau intends, at minimum, to publish the names of
participants admitted to the BCFP Product Sandbox pursuant to
Section II.F, but reserves the discretion to negotiate any
additional disclosure terms with the corresponding regulator to the
extent permitted by law.
\95\ Upon request, and to the extent permitted by law, the
Bureau does not intend to release identifying information from
published denials, and intends to redact such information from the
denials published on its website. The Bureau intends to publish
denials only after the applicant is given an opportunity to request
reconsideration of the denial.
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Public disclosure of any other information regarding admission to
the BCFP Product Sandbox is governed by applicable law, including the
Dodd-Frank Act,\96\ the Freedom of Information Act (FOIA),\97\ and the
Bureau's rule on Disclosure of Records and Information (Disclosure
Rule).\98\ The Disclosure Rule generally prohibits the Bureau from
disclosing confidential information,\99\ and defines confidential
information to include confidential supervisory information and Bureau
information that may be exempt from disclosure under the FOIA \100\--
including trade secrets and confidential commercial or financial
information that is privileged or confidential.\101\ The Disclosure
Rule defines confidential supervisory information to include any
information provided to the Bureau by a financial institution to enable
the Bureau to monitor for risks to consumers in the offering or
provision of consumer financial products or services.\102\ Relatedly,
the Disclosure Rule defines business information as commercial or
financial information obtained by the Bureau from a submitter that may
be protected from disclosure under Exemption 4 of FOIA, and generally
provides that such business information shall not be disclosed pursuant
to a FOIA request except in accordance with section 1070.20 of the
rule.\103\
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\96\ See, e.g., 12 U.S.C. 5512(c)(8).
\97\ 5 U.S.C. 552.
\98\ 12 CFR part 1070.
\99\ 12 CFR 1070.41.
\100\ 12 CFR 1070.2(f).
\101\ 5 U.S.C. 552(b)(4).
\102\ 12 CFR 1070.2(i)(1)(iv).
\103\ 12 CFR 1070.20(a), (b).
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The Bureau anticipates that much of the information submitted by
applicants in their applications, and by recipients during their
participation in the BCFP Product Sandbox pursuant to the Terms and
Conditions document, will qualify as confidential information, which
may include confidential supervisory information, and/or business
information, under the Disclosure Rule.\104\ In particular, the
information requested under subsections II.B.3, II.B.4, II.B.6, and
II.B.8 is designed to enable the Bureau to assess potential risks to
consumers posed by the described aspect of the product or service.
Similarly, subsection II.D.5 requires recipients to report information
about the effects of offering or providing the described aspects of the
product or service on complaint patterns, default rates, or similar
metrics that will enable to the Bureau to determine if doing so is
causing material, tangible harm to consumers. The other data and
information the recipient(s) will provide pursuant to subsection II.D.6
will likewise be used by the Bureau to monitor for risks to consumers.
Therefore, the Bureau expects that much of the information submitted
that is responsive to subsections II.B.3, II.B.4, II.B.6, and II.B.8,
and the referenced portions of subsection II.D, may constitute
confidential supervisory information, since it is obtained for the
purpose of monitoring for risks to consumers. Additionally, the Bureau
expects that much of the information or data submitted responsive to
subsections II.B.2, II.B.8, and II.D.6 will constitute business
information. The Bureau expects that it may also constitute
confidential supervisory information, since understanding the nature of
the described aspects of the product or service is essential for the
Bureau to monitor for risks to consumers.105 106
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\104\ To the extent associated communications include the same
information, that information would have the same status. But other
information in associated communications may be subject to
disclosure.
\105\ To the extent an applicant or recipient submits
information in connection with any of the identified subsections
that is not actually responsive to these subsections, such
information may be subject to disclosure.
\106\ The Bureau notes that the preceding protections from
public disclosure must be balanced against the Bureau's potential
need to publicly disclose submitted data in some form--as permitted
by applicable law and/or consent of recipients--if it decides to
revise relevant regulatory provisions through notice-and-comment
rulemaking based, in part, on such data--as provided in Section E.
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Disclosure of information or data provided to the Bureau under the
Policy to other Federal and State agencies is governed by applicable
law, including the Dodd-Frank Act \107\ and the Bureau's Disclosure
Rule, and subject to Bureau Bulletin 12-01.\108\ This includes
disclosure consistent with Memoranda of Understanding (MOUs) the Bureau
has with other Federal and State agencies. For example, under certain
MOUs with other Federal agencies, the Bureau has agreed to provide CSI
to those agencies.
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\107\ See, e.g., 15 U.S.C. 5512(c)(6); 5514(b)(3); 5515(b)(2);
5516(c)(2); 5516(d)(2).
\108\ Available at: https://files.consumerfinance.gov/f/2012/01/GC_bulletin_12-01.pdf.
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To the extent the Bureau wishes to publicly disclose non-
confidential information regarding the BCFP Product Sandbox, the terms
of such disclosure will be included in the Terms and Conditions
document specified in Section II.D. The Bureau intends to draft the
document in a manner such that confidential information is not
disclosed. Consistent with applicable law and its own rules, the Bureau
will not seek to publicly disclose any information or data that would
conflict with consumers' privacy interests.
Dated: December 6, 2018.
Mick Mulvaney,
Acting Director, Bureau of Consumer Financial Protection.
[FR Doc. 2018-26873 Filed 12-12-18; 8:45 am]
BILLING CODE 4810-AM-P
