Responsible Business Conduct: Self-Assessing, Self-Reporting, Remediating, and Cooperating (CFPB BULLETIN 2020-01), 15917-15919 [2020-05505]

Download as PDF Federal Register / Vol. 85, No. 55 / Friday, March 20, 2020 / Rules and Regulations part 365 of the FDIC’s Real Estate Lending Standards regulation to that of the other Federal banking agencies. List of Subjects in 12 CFR Part 365 Banks, Banking, Mortgages. For the reasons stated in the preamble, the FDIC corrects 12 CFR part 365 by making the following correcting amendment: PART 365—REAL ESTATE LENDING STANDARDS 1. The authority citation for part 365 is revised to read as follows: ■ Authority: 12 U.S.C. 1828(o) and 5101 et seq. 2. Amend appendix A to subpart A of part 365 by revising footnote 4 to read as follows: ■ Appendix A to Subpart A of Part 365— Interagency Guidelines for Real Estate Lending Policies * * * * * 4 For state non-member banks and state savings associations, ‘‘total capital’’ refers to that term described in § 324.2 of this chapter. * * * * * Federal Deposit Insurance Corporation. Dated in Washington, DC, on March 12, 2020. Robert E. Feldman, Executive Secretary. [FR Doc. 2020–05441 Filed 3–19–20; 8:45 am] BILLING CODE 6714–01–P BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Chapter X Responsible Business Conduct: SelfAssessing, Self-Reporting, Remediating, and Cooperating (CFPB BULLETIN 2020–01) Bureau of Consumer Financial Protection. ACTION: Bulletin. jbell on DSKJLSW7X2PROD with RULES AGENCY: SUMMARY: In 2013, the Bureau of Consumer Financial Protection (Bureau) issued a Bulletin that identified several activities that businesses could engage in that could prevent and minimize harm to consumers, referring to these activities as ‘‘responsible conduct.’’ The Bureau is issuing this updated Bulletin to clarify its approach to responsible conduct and to reiterate the importance of such conduct. DATES: This Bulletin is applicable on March 20, 2020. FOR FURTHER INFORMATION CONTACT: Colin Reardon, Division of Supervision, Enforcement, and Fair Lending, at (202) VerDate Sep<11>2014 17:04 Mar 19, 2020 Jkt 250001 435–9668. If you require this document in an alternative electronic format, please contact CFPB_Accessibility@ cfpb.gov. In executing its statutory responsibilities, the Bureau places primary emphasis on preventing harm to consumers. Preventing harm to consumers is among the most effective and efficient ways of ensuring consumer access to a fair, transparent, and competitive financial market. In 2013, the Bureau issued a Bulletin that identified several activities that individuals or businesses, collectively ‘‘entities,’’ could engage in that could prevent and minimize harm to consumers, referring to these activities as ‘‘responsible conduct.’’ The Bureau is issuing this updated Bulletin to clarify its approach to responsible conduct and to reiterate the importance of such conduct. In the first instance, the Bureau’s focus is on building a culture of compliance among entities, including covered persons and service providers, in order to minimize the likelihood of a violation of Federal consumer financial law, and thereby prevent harm to consumers. When a violation of law does occur, swift and effective actions taken by an entity to address the violation can minimize resulting harm to consumers. Specifically, an entity may self-assess its compliance with Federal consumer financial law, selfreport to the Bureau when it identifies likely violations, remediate the harm resulting from these likely violations, and cooperate above and beyond what is required by law with any Bureau review or investigation. Such activities are in the public interest. Depending on its form and substance, responsible conduct can improve the Bureau’s ability to promptly detect violations of Federal consumer financial law, increase the effectiveness and efficiency of its supervisory and enforcement work, enable the Bureau to focus its finite resources on their best use for the mission, and help more consumers in more matters promptly receive financial redress and additional meaningful remedies for any harm they experienced. Because responsible conduct is in the public interest, the Bureau seeks to encourage it. Accordingly, if an entity meaningfully engages in responsible conduct, the Bureau intends to favorably consider such conduct, along with other relevant factors, in addressing violations of Federal consumer financial law in supervisory SUPPLEMENTARY INFORMATION: PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 15917 and enforcement matters.1 Depending on the nature and extent of an entity’s actions, the Bureau has a wide range of options available to properly account for responsible conduct. For example, in light of an entity’s responsible conduct, the Bureau could exercise its discretion to close an enforcement investigation with no action or decide not to include Matters Requiring Attention in an exam report or supervisory letter. Even if the Bureau does take action, those who engage in responsible conduct may receive other types of credit for engaging in such behavior. For entities within the Bureau’s supervisory authority, the Bureau’s Division of Supervision, Enforcement, and Fair Lending makes determinations of whether violations should be resolved through non-public supervisory action or a possible public enforcement action through its Action Review Committee (ARC) process. The ARC process includes factors that are closely aligned with the elements of responsible conduct. Thus, for entities under the Bureau’s supervisory authority, responsible conduct could result in resolving violations nonpublicly through the supervisory process. Responsible conduct also could result in the Bureau’s reducing the number of violations pursued or reducing the sanctions or penalties sought by the Bureau in any public enforcement action. The Bureau intends to consider the extent and significance of an entity’s responsible conduct, with more extensive and important responsible conduct leading to more substantial consideration. This guidance, and its description of factors that may warrant favorable consideration, is not adopting any rule or formula to be applied in all matters. The importance of each factor in a given matter, and the way in which the Bureau evaluates each factor, will depend on the circumstances. The Bureau is not in any way limiting its discretion and responsibility to evaluate each matter individually on its own facts and circumstances. In short, the fact that an entity may argue it has satisfied some or even all of the factors set forth in this guidance will not necessarily foreclose the Bureau from bringing any enforcement action or 1 Other factors the Bureau considers in determining how to resolve violations of Federal consumer financial law include, without limitation, (1) the nature, extent, and severity of the violations identified and any associated consumer harm; (2) an entity’s demonstrated effectiveness and willingness to address the violations; and (3) the importance of deterrence, considering the significance and pervasiveness of the potential consumer harm. E:\FR\FM\20MRR1.SGM 20MRR1 15918 Federal Register / Vol. 85, No. 55 / Friday, March 20, 2020 / Rules and Regulations seeking any remedy if it believes such a course is necessary and appropriate. Factors Used To Evaluate and Acknowledge Responsible Conduct As noted previously, the Bureau principally considers four categories of conduct when evaluating whether some form of credit is warranted in an enforcement investigation or supervisory matter: Self-assessing, selfreporting, remediating, and cooperating. However, if an entity engages in another type of activity particular to its situation that is both substantial and meaningful, the Bureau may take that activity into consideration. Listed below are some of the factors the Bureau intends to consider in determining whether and how much to take into account responsible conduct. This list is not exhaustive, and some of the factors identified may relate to more than one category of responsible conduct. jbell on DSKJLSW7X2PROD with RULES Self-Assessing This factor, which can also be described as self-monitoring or selfauditing, reflects a proactive commitment by an entity to use resources for the prevention and early detection of violations of Federal consumer financial law. The Bureau recognizes that a robust compliance management system appropriate for the size and complexity of an entity’s business will not prevent all violations, but it will reduce the risk of violations, and it will often facilitate early detection of likely violations, which can limit the size and scope of consumer harm. Questions the Bureau intends to consider in determining whether to provide favorable consideration for selfassessing activity include: 1. What resources does the entity devote to compliance? How robust and effective is its compliance management system? Is it appropriate for the size and complexity of the entity’s business? 2. Has the entity taken steps to improve its compliance management system when deficiencies have been identified either by itself or external regulators? Did the entity ignore obvious deficiencies in compliance procedures? Does the entity have a culture of compliance? 3. Considering the nature of the violation, did the entity identify the issue? What is the nature of the violation or likely violation and how did it arise? Was the conduct pervasive or an isolated act? How long did it last? Did senior personnel participate in, or turn a blind eye toward, obvious indicia of misconduct? VerDate Sep<11>2014 17:04 Mar 19, 2020 Jkt 250001 4. How was the violation detected and who uncovered it? If identified by the entity, how did the entity identify the issue (e.g., from customer complaints, audits or monitoring based on routine risk assessments, or whistleblower activity)? Was the identification the result of a robust and effective compliance management system including adequate internal audit, monitoring, and complaint review processes? Was identification prompted by an impending exam or an investigation by a regulator? 5. What self-assessment mechanisms were in place to effectively prevent, identify, or limit the conduct that occurred, elevate it appropriately, and preserve relevant information? In what ways, if any, were the entity’s selfassessing mechanisms particularly noteworthy and effective? Self-Reporting This factor substantially advances the Bureau’s protection of consumers and enhances its mission by reducing the resources it must expend to identify violations and making those resources available for other significant matters. Prompt self-reporting of likely violations also represents concrete evidence of an entity’s commitment to responsibly address the conduct at issue. Conversely, efforts to conceal a likely violation from the Bureau represent concrete evidence of the entity’s lack of commitment to responsibly address the conduct at issue. For these reasons, the Bureau considers this factor in its evaluation of an entity’s overall conduct. Of note, however, an entity’s self-reporting of a potential issue does not require it to concede that it has violated the law. Questions the Bureau intends to examine in determining whether to provide favorable consideration for selfreporting of likely violations of Federal consumer financial law include: 1. Did the entity completely and effectively disclose the existence of the conduct to the Bureau, to other regulators, and, if applicable, to selfregulatory organizations? Did the entity report any additional related misconduct likely to have occurred? 2. Did the entity report the conduct to the Bureau without unreasonable delay? If it delayed, what justification, if any, existed for the delay? How did the delay affect the preservation of relevant information, the ability of the Bureau to conduct its review or investigation, or the interests of affected consumers? 3. Did the entity proactively selfreport, or wait until discovery or disclosure was likely to happen anyway, for example due to impending PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 supervisory activity, public company reporting requirements, the emergence of a whistleblower, consumer complaints or actions, or the conduct of a Bureau investigation? Remediating When violations of Federal consumer financial law have occurred, the Bureau’s remedial priorities include obtaining full redress for those injured by the violations, ensuring that the entity who violated the law implements measures designed to prevent the violations from recurring, and, when appropriate, effectuating changes in the entity’s future conduct for the protection and/or benefit of consumers. Questions the Bureau intends to examine in determining whether to provide favorable consideration for remediation activity regarding likely violations of Federal consumer financial law include: 1. What steps did the entity take upon learning of the violation? Did it immediately stop the violation? How long after the violation was uncovered did it take to implement an effective response? 2. What steps did the entity take to discipline the individuals responsible for the violation and to prevent the individuals from repeating the same or similar conduct? 3. Did the entity conduct an analysis to determine the number of affected consumers and the extent to which they were harmed? Were consumers made whole through compensation and other appropriate relief, as applicable? Did affected consumers receive appropriate information related to the violations within a reasonable period of time? 4. What assurances are there that the violation (or a similar violation) is unlikely to recur? Did the entity take measures, such as a root-cause analysis, to ensure that the issues were addressed and resolved in a manner likely to prevent and minimize future violations? Similarly, have the entity’s business practices, policies, and procedures changed to remove harmful incentives and encourage proper compliance? Cooperating Unlike self-assessing and remediating, which may occur with or without Bureau involvement, cooperating relates to the quality of an entity’s interactions with the Bureau after the Bureau becomes aware of a likely violation of Federal consumer financial law, either through an entity’s self-reporting or the Bureau’s own efforts. Credit for cooperating in this context depends on the extent to which an entity takes steps above and beyond what the law requires E:\FR\FM\20MRR1.SGM 20MRR1 jbell on DSKJLSW7X2PROD with RULES Federal Register / Vol. 85, No. 55 / Friday, March 20, 2020 / Rules and Regulations in its interactions with the Bureau. Simply meeting those legal obligations is not a factor that the Bureau intends to give any special consideration in a supervisory review or enforcement investigation. Of note, the Bureau does not consider an entity’s good faith assertion of privilege in an enforcement investigation to be a lack of cooperation; an entity asserting privileges in good faith remains eligible for potential favorable consideration for cooperating. Questions the Bureau intends to examine in determining whether to provide favorable consideration for cooperating in a Bureau matter include: 1. Did the entity cooperate promptly and completely with the Bureau and other appropriate regulatory and law enforcement bodies? Was that cooperation present throughout the course of the review and/or investigation? 2. Did the entity take proper steps to develop the facts quickly and completely and to fully share its findings with the Bureau? Did it undertake a thorough review of the nature, extent, origins, and consequences of the violation and related behavior? Who conducted the review and did they have a vested interest or bias in the outcome? Were scope limitations placed on the review? If so, why and what were they? 3. Did the entity promptly make available to the Bureau the results of its review and provide sufficient documentation reflecting its response to the situation? Did it provide evidence with sufficient precision and completeness to facilitate, among other things, appropriate actions against others who violated the law? Did the entity produce a complete and thorough written report detailing the findings of its review? Did it voluntarily disclose material information not directly requested by the Bureau or that otherwise might not have been uncovered? Did the entity provide all relevant, non-privileged information and make assertions of privilege in good faith? 4. Did the entity direct its employees to cooperate with the Bureau and make reasonable efforts to secure such cooperation? Did it make the most appropriate person(s) available for interviews, consultation, and/or sworn statements? The Bureau intends for this guidance to encourage entities subject to the Bureau’s supervisory and enforcement authority to engage in more ‘‘responsible conduct,’’ as defined herein. Such an outcome, the Bureau believes, would benefit both consumers and providers of consumer financial VerDate Sep<11>2014 17:04 Mar 19, 2020 Jkt 250001 products and services, is in the public interest, and supports the Bureau’s efforts to prevent consumer harm. Regulatory Requirements This Bulletin is a non-binding general statement of policy articulating considerations relevant to the Bureau’s exercise of its supervisory and enforcement authority. It is therefore exempt from notice and comment rulemaking requirements under the Administrative Procedure Act pursuant to 5 U.S.C. 553(b). Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis. 5 U.S.C. 603(a), 604(a). The Bureau has determined that this Bulletin does not impose any new or revise any existing recordkeeping, reporting, or disclosure requirements on covered entities or members of the public that would be collections of information requiring OMB approval under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. Pursuant to the Congressional Review Act, 5 U.S.C. 801 et seq., the Bureau will submit a report containing this policy statement and other required information to the United States Senate, the United States House of Representatives, and the Comptroller General of the United States prior to its applicability date. The Office of Information and Regulatory Affairs has designated this policy statement as not a ‘‘major rule’’ as defined by 5 U.S.C. 804(2). Dated: March 6, 2020. Kathleen L. Kraninger, Director, Bureau of Consumer Financial Protection. [FR Doc. 2020–05505 Filed 3–19–20; 8:45 am] BILLING CODE 4810–AM–P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA–2019–0863; Product Identifier 2019–NM–157–AD; Amendment 39–19867; AD 2020–05–17] RIN 2120–AA64 Airworthiness Directives; Airbus SAS Airplanes Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule. AGENCY: SUMMARY: The FAA is adopting a new airworthiness directive (AD) for certain PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 15919 Airbus SAS Model A318–112, A319– 111, A319–112, A319–113, A319–114, A319–115, A319–131, A319–132, A319– 133, A320–211, A320–212, A320–214, A320–216, A320–231, A320–232, A320– 233, A320–251N, and A320–271N airplanes. This AD was prompted by a report of marginal clearance between certain fuel sensor covers on both lefthand (LH) and right-hand (RH) wings. This AD requires the replacement of certain fuel level sensor brackets, as specified in a European Union Aviation Safety Agency (EASA) AD, which is incorporated by reference. The FAA is issuing this AD to address the unsafe condition on these products. DATES: This AD is effective April 24, 2020. The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of April 24, 2020. ADDRESSES: For the material incorporated by reference (IBR) in this AD, contact the EASA, KonradAdenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 89990 1000; email ADs@easa.europa.eu; internet www.easa.europa.eu. You may find this IBR material on the EASA website at https://ad.easa.europa.eu. You may view this IBR material at the FAA, Transport Standards Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206–231–3195. It is also available in the AD docket on the internet at https:// www.regulations.gov by searching for and locating Docket No. FAA–2019– 0863. Examining the AD Docket You may examine the AD docket on the internet at https:// www.regulations.gov by searching for and locating Docket No. FAA–2019– 0863; or in person at Docket Operations between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this final rule, the regulatory evaluation, any comments received, and other information. The address for Docket Operations is U.S. Department of Transportation, Docket Operations, M– 30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE, Washington, DC 20590. FOR FURTHER INFORMATION CONTACT: Sanjay Ralhan, Aerospace Engineer, International Section, Transport Standards Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206–231–3223; email Sanjay.Ralhan@faa.gov. SUPPLEMENTARY INFORMATION: E:\FR\FM\20MRR1.SGM 20MRR1

Agencies

[Federal Register Volume 85, Number 55 (Friday, March 20, 2020)]
[Rules and Regulations]
[Pages 15917-15919]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-05505]


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BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Chapter X


Responsible Business Conduct: Self-Assessing, Self-Reporting, 
Remediating, and Cooperating (CFPB BULLETIN 2020-01)

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Bulletin.

-----------------------------------------------------------------------

SUMMARY: In 2013, the Bureau of Consumer Financial Protection (Bureau) 
issued a Bulletin that identified several activities that businesses 
could engage in that could prevent and minimize harm to consumers, 
referring to these activities as ``responsible conduct.'' The Bureau is 
issuing this updated Bulletin to clarify its approach to responsible 
conduct and to reiterate the importance of such conduct.

DATES: This Bulletin is applicable on March 20, 2020.

FOR FURTHER INFORMATION CONTACT: Colin Reardon, Division of 
Supervision, Enforcement, and Fair Lending, at (202) 435-9668. If you 
require this document in an alternative electronic format, please 
contact [email protected].

SUPPLEMENTARY INFORMATION: In executing its statutory responsibilities, 
the Bureau places primary emphasis on preventing harm to consumers. 
Preventing harm to consumers is among the most effective and efficient 
ways of ensuring consumer access to a fair, transparent, and 
competitive financial market. In 2013, the Bureau issued a Bulletin 
that identified several activities that individuals or businesses, 
collectively ``entities,'' could engage in that could prevent and 
minimize harm to consumers, referring to these activities as 
``responsible conduct.'' The Bureau is issuing this updated Bulletin to 
clarify its approach to responsible conduct and to reiterate the 
importance of such conduct.
    In the first instance, the Bureau's focus is on building a culture 
of compliance among entities, including covered persons and service 
providers, in order to minimize the likelihood of a violation of 
Federal consumer financial law, and thereby prevent harm to consumers. 
When a violation of law does occur, swift and effective actions taken 
by an entity to address the violation can minimize resulting harm to 
consumers. Specifically, an entity may self-assess its compliance with 
Federal consumer financial law, self-report to the Bureau when it 
identifies likely violations, remediate the harm resulting from these 
likely violations, and cooperate above and beyond what is required by 
law with any Bureau review or investigation.
    Such activities are in the public interest. Depending on its form 
and substance, responsible conduct can improve the Bureau's ability to 
promptly detect violations of Federal consumer financial law, increase 
the effectiveness and efficiency of its supervisory and enforcement 
work, enable the Bureau to focus its finite resources on their best use 
for the mission, and help more consumers in more matters promptly 
receive financial redress and additional meaningful remedies for any 
harm they experienced.
    Because responsible conduct is in the public interest, the Bureau 
seeks to encourage it. Accordingly, if an entity meaningfully engages 
in responsible conduct, the Bureau intends to favorably consider such 
conduct, along with other relevant factors, in addressing violations of 
Federal consumer financial law in supervisory and enforcement 
matters.\1\ Depending on the nature and extent of an entity's actions, 
the Bureau has a wide range of options available to properly account 
for responsible conduct. For example, in light of an entity's 
responsible conduct, the Bureau could exercise its discretion to close 
an enforcement investigation with no action or decide not to include 
Matters Requiring Attention in an exam report or supervisory letter. 
Even if the Bureau does take action, those who engage in responsible 
conduct may receive other types of credit for engaging in such 
behavior. For entities within the Bureau's supervisory authority, the 
Bureau's Division of Supervision, Enforcement, and Fair Lending makes 
determinations of whether violations should be resolved through non-
public supervisory action or a possible public enforcement action 
through its Action Review Committee (ARC) process. The ARC process 
includes factors that are closely aligned with the elements of 
responsible conduct. Thus, for entities under the Bureau's supervisory 
authority, responsible conduct could result in resolving violations 
non-publicly through the supervisory process. Responsible conduct also 
could result in the Bureau's reducing the number of violations pursued 
or reducing the sanctions or penalties sought by the Bureau in any 
public enforcement action. The Bureau intends to consider the extent 
and significance of an entity's responsible conduct, with more 
extensive and important responsible conduct leading to more substantial 
consideration.
---------------------------------------------------------------------------

    \1\ Other factors the Bureau considers in determining how to 
resolve violations of Federal consumer financial law include, 
without limitation, (1) the nature, extent, and severity of the 
violations identified and any associated consumer harm; (2) an 
entity's demonstrated effectiveness and willingness to address the 
violations; and (3) the importance of deterrence, considering the 
significance and pervasiveness of the potential consumer harm.
---------------------------------------------------------------------------

    This guidance, and its description of factors that may warrant 
favorable consideration, is not adopting any rule or formula to be 
applied in all matters. The importance of each factor in a given 
matter, and the way in which the Bureau evaluates each factor, will 
depend on the circumstances. The Bureau is not in any way limiting its 
discretion and responsibility to evaluate each matter individually on 
its own facts and circumstances. In short, the fact that an entity may 
argue it has satisfied some or even all of the factors set forth in 
this guidance will not necessarily foreclose the Bureau from bringing 
any enforcement action or

[[Page 15918]]

seeking any remedy if it believes such a course is necessary and 
appropriate.

Factors Used To Evaluate and Acknowledge Responsible Conduct

    As noted previously, the Bureau principally considers four 
categories of conduct when evaluating whether some form of credit is 
warranted in an enforcement investigation or supervisory matter: Self-
assessing, self-reporting, remediating, and cooperating. However, if an 
entity engages in another type of activity particular to its situation 
that is both substantial and meaningful, the Bureau may take that 
activity into consideration.
    Listed below are some of the factors the Bureau intends to consider 
in determining whether and how much to take into account responsible 
conduct. This list is not exhaustive, and some of the factors 
identified may relate to more than one category of responsible conduct.

Self-Assessing

    This factor, which can also be described as self-monitoring or 
self-auditing, reflects a proactive commitment by an entity to use 
resources for the prevention and early detection of violations of 
Federal consumer financial law. The Bureau recognizes that a robust 
compliance management system appropriate for the size and complexity of 
an entity's business will not prevent all violations, but it will 
reduce the risk of violations, and it will often facilitate early 
detection of likely violations, which can limit the size and scope of 
consumer harm. Questions the Bureau intends to consider in determining 
whether to provide favorable consideration for self-assessing activity 
include:
    1. What resources does the entity devote to compliance? How robust 
and effective is its compliance management system? Is it appropriate 
for the size and complexity of the entity's business?
    2. Has the entity taken steps to improve its compliance management 
system when deficiencies have been identified either by itself or 
external regulators? Did the entity ignore obvious deficiencies in 
compliance procedures? Does the entity have a culture of compliance?
    3. Considering the nature of the violation, did the entity identify 
the issue? What is the nature of the violation or likely violation and 
how did it arise? Was the conduct pervasive or an isolated act? How 
long did it last? Did senior personnel participate in, or turn a blind 
eye toward, obvious indicia of misconduct?
    4. How was the violation detected and who uncovered it? If 
identified by the entity, how did the entity identify the issue (e.g., 
from customer complaints, audits or monitoring based on routine risk 
assessments, or whistleblower activity)? Was the identification the 
result of a robust and effective compliance management system including 
adequate internal audit, monitoring, and complaint review processes? 
Was identification prompted by an impending exam or an investigation by 
a regulator?
    5. What self-assessment mechanisms were in place to effectively 
prevent, identify, or limit the conduct that occurred, elevate it 
appropriately, and preserve relevant information? In what ways, if any, 
were the entity's self-assessing mechanisms particularly noteworthy and 
effective?

Self-Reporting

    This factor substantially advances the Bureau's protection of 
consumers and enhances its mission by reducing the resources it must 
expend to identify violations and making those resources available for 
other significant matters. Prompt self-reporting of likely violations 
also represents concrete evidence of an entity's commitment to 
responsibly address the conduct at issue. Conversely, efforts to 
conceal a likely violation from the Bureau represent concrete evidence 
of the entity's lack of commitment to responsibly address the conduct 
at issue. For these reasons, the Bureau considers this factor in its 
evaluation of an entity's overall conduct. Of note, however, an 
entity's self-reporting of a potential issue does not require it to 
concede that it has violated the law. Questions the Bureau intends to 
examine in determining whether to provide favorable consideration for 
self-reporting of likely violations of Federal consumer financial law 
include:
    1. Did the entity completely and effectively disclose the existence 
of the conduct to the Bureau, to other regulators, and, if applicable, 
to self-regulatory organizations? Did the entity report any additional 
related misconduct likely to have occurred?
    2. Did the entity report the conduct to the Bureau without 
unreasonable delay? If it delayed, what justification, if any, existed 
for the delay? How did the delay affect the preservation of relevant 
information, the ability of the Bureau to conduct its review or 
investigation, or the interests of affected consumers?
    3. Did the entity proactively self-report, or wait until discovery 
or disclosure was likely to happen anyway, for example due to impending 
supervisory activity, public company reporting requirements, the 
emergence of a whistleblower, consumer complaints or actions, or the 
conduct of a Bureau investigation?

Remediating

    When violations of Federal consumer financial law have occurred, 
the Bureau's remedial priorities include obtaining full redress for 
those injured by the violations, ensuring that the entity who violated 
the law implements measures designed to prevent the violations from 
recurring, and, when appropriate, effectuating changes in the entity's 
future conduct for the protection and/or benefit of consumers. 
Questions the Bureau intends to examine in determining whether to 
provide favorable consideration for remediation activity regarding 
likely violations of Federal consumer financial law include:
    1. What steps did the entity take upon learning of the violation? 
Did it immediately stop the violation? How long after the violation was 
uncovered did it take to implement an effective response?
    2. What steps did the entity take to discipline the individuals 
responsible for the violation and to prevent the individuals from 
repeating the same or similar conduct?
    3. Did the entity conduct an analysis to determine the number of 
affected consumers and the extent to which they were harmed? Were 
consumers made whole through compensation and other appropriate relief, 
as applicable? Did affected consumers receive appropriate information 
related to the violations within a reasonable period of time?
    4. What assurances are there that the violation (or a similar 
violation) is unlikely to recur? Did the entity take measures, such as 
a root-cause analysis, to ensure that the issues were addressed and 
resolved in a manner likely to prevent and minimize future violations? 
Similarly, have the entity's business practices, policies, and 
procedures changed to remove harmful incentives and encourage proper 
compliance?

Cooperating

    Unlike self-assessing and remediating, which may occur with or 
without Bureau involvement, cooperating relates to the quality of an 
entity's interactions with the Bureau after the Bureau becomes aware of 
a likely violation of Federal consumer financial law, either through an 
entity's self-reporting or the Bureau's own efforts. Credit for 
cooperating in this context depends on the extent to which an entity 
takes steps above and beyond what the law requires

[[Page 15919]]

in its interactions with the Bureau. Simply meeting those legal 
obligations is not a factor that the Bureau intends to give any special 
consideration in a supervisory review or enforcement investigation. Of 
note, the Bureau does not consider an entity's good faith assertion of 
privilege in an enforcement investigation to be a lack of cooperation; 
an entity asserting privileges in good faith remains eligible for 
potential favorable consideration for cooperating. Questions the Bureau 
intends to examine in determining whether to provide favorable 
consideration for cooperating in a Bureau matter include:
    1. Did the entity cooperate promptly and completely with the Bureau 
and other appropriate regulatory and law enforcement bodies? Was that 
cooperation present throughout the course of the review and/or 
investigation?
    2. Did the entity take proper steps to develop the facts quickly 
and completely and to fully share its findings with the Bureau? Did it 
undertake a thorough review of the nature, extent, origins, and 
consequences of the violation and related behavior? Who conducted the 
review and did they have a vested interest or bias in the outcome? Were 
scope limitations placed on the review? If so, why and what were they?
    3. Did the entity promptly make available to the Bureau the results 
of its review and provide sufficient documentation reflecting its 
response to the situation? Did it provide evidence with sufficient 
precision and completeness to facilitate, among other things, 
appropriate actions against others who violated the law? Did the entity 
produce a complete and thorough written report detailing the findings 
of its review? Did it voluntarily disclose material information not 
directly requested by the Bureau or that otherwise might not have been 
uncovered? Did the entity provide all relevant, non-privileged 
information and make assertions of privilege in good faith?
    4. Did the entity direct its employees to cooperate with the Bureau 
and make reasonable efforts to secure such cooperation? Did it make the 
most appropriate person(s) available for interviews, consultation, and/
or sworn statements?
    The Bureau intends for this guidance to encourage entities subject 
to the Bureau's supervisory and enforcement authority to engage in more 
``responsible conduct,'' as defined herein. Such an outcome, the Bureau 
believes, would benefit both consumers and providers of consumer 
financial products and services, is in the public interest, and 
supports the Bureau's efforts to prevent consumer harm.

Regulatory Requirements

    This Bulletin is a non-binding general statement of policy 
articulating considerations relevant to the Bureau's exercise of its 
supervisory and enforcement authority. It is therefore exempt from 
notice and comment rulemaking requirements under the Administrative 
Procedure Act pursuant to 5 U.S.C. 553(b). Because no notice of 
proposed rulemaking is required, the Regulatory Flexibility Act does 
not require an initial or final regulatory flexibility analysis. 5 
U.S.C. 603(a), 604(a). The Bureau has determined that this Bulletin 
does not impose any new or revise any existing recordkeeping, 
reporting, or disclosure requirements on covered entities or members of 
the public that would be collections of information requiring OMB 
approval under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.
    Pursuant to the Congressional Review Act, 5 U.S.C. 801 et seq., the 
Bureau will submit a report containing this policy statement and other 
required information to the United States Senate, the United States 
House of Representatives, and the Comptroller General of the United 
States prior to its applicability date. The Office of Information and 
Regulatory Affairs has designated this policy statement as not a 
``major rule'' as defined by 5 U.S.C. 804(2).

    Dated: March 6, 2020.
Kathleen L. Kraninger,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2020-05505 Filed 3-19-20; 8:45 am]
 BILLING CODE 4810-AM-P