CFPB Pilots Advisory Opinion Program to Address “Regulatory Uncertainty”

On June 18, 2020, the Consumer Financial Protection Bureau (CFPB) announced the launch of its pilot advisory opinion (AO) program.  The CFPB quickly followed this announcement by publishing a procedural rule implementing the pilot AO program, as well as a proposed procedural rule that would establish a permanent AO program to replace the pilot.  According to the CFPB, the pilot AO program is intended to “provide guidance with interpretive content that is: [f]ocused on regulatory uncertainty identified by requestors; reliable for the requestor and all similarly situated parties as the Bureau’s authoritative interpretation of the law; and publicly released for the awareness of all affected persons.”

Prior to implementing the AO program, the CFPB occasionally provided guidance through interpretive rules or general policy statements.  Earlier this year, the CFPB expressed a commitment to providing additional guidance in the form of “Compliance Aids” (intended to present existing requirements in a “useful” manner and provide “practical suggestions” for compliance), but stressed that the Compliance Aids did not have the force of official interpretations.  The AO program will provide more firm guidance for regulated entities to rely on.

During the pilot AO program, only covered persons or service providers that are subject to the CFPB’s supervisory authority are permitted to submit requests for AO guidance, and must identify themselves in the request.  The CFPB will not accept requests from third parties on behalf of unnamed entities, such as trade associations or law firms. In deciding whether to issue an AO, the CFPB will consider a number of factors.  Factors weighing in favor of issuing an AO include: (1) the issue was previously determined to be one that might benefit from additional regulatory clarity; (2) the issue is of substantive importance; and/or (3) the issue concerns a previously-unaddressed ambiguity. Factors weighing against issuing an AO include: (1) the issue is the subject of an ongoing CFPB investigation or enforcement action; (2) the issue is the subject of an ongoing or planned rulemaking; (3) the issue is better suited for another form of guidance; and/or (4) there is already clear CFPB or court precedent on the issue.  Resulting AOs will be considered interpretive rules under the Administrative Procedure Act, and will be published in the Federal Register and on the CFPB website.

The proposed AO program (which would replace the pilot) is similar to the pilot program, except that the CFPB intends to accept requests from entities other than covered persons or service providers.  The CFPB is seeking comment on “all aspects of the Proposed AO Program,” including application requirements (including for requestors with limited resources), prioritization of AO requests, and the format in which AO guidance is made available to the public.  The deadline to comment on the program is August 21, 2020.

As noted, AO guidance will have the force of an interpretive rule, and will be applicable to entities in situations with similar facts and circumstances as the requestor.  Although the CFPB does not intend to issue AOs for highly fact intensive issues—for example, the CFPB has suggested that questions of unfair, deceptive, or abusive acts or practices would be “challenging” to address in AO guidance—regulated entities now have an additional vehicle by which to obtain meaningful clarity on regulatory requirements.