CFPB Revises Supervisory Appeals Process

On February 16, 2024, the Consumer Financial Protection Bureau (CFPB or Bureau) announced that it is updating its internal supervisory appeals process for institutions seeking to appeal a compliance rating or an adverse material finding.  If a supervised entity disagrees with a compliance rating or any other adverse finding after examination or targeted review by the CFPB, the entity may now appeal the Bureau’s findings through the revised supervisory appeal process.  Any entity subject to the CFPB’s supervisory authority may use the supervisory appeals process.

In addition to a number of “clarifying changes,” the Final Rule reflects three significant changes to the Bureau’s appeals process.

First, the CFPB’s revised supervisory appeals process “broadens the pool of potential members of the appeals committee to include any CFPB manager who did not participate in the underlying matter being appealed and who has relevant expertise on the issue(s) raised by the appeal,” not only managers from Supervision as specified in the previous appeals process.  The Final Rule further explains that the Bureau’s Supervision Director will select three CFPB managers who meet the criteria to serve on the appeals committee which will, in turn, advise the Supervisory Director on how to resolve an appeal.  Members of the appeals committee will work in conjunction with legal counsel designated by the Bureau’s General Counsel.  Second, the revised process introduces a “new option” for resolving a supervisory appeal—remanding a matter to Supervision staff for consideration of a “modified finding.”  This new option is in addition to the existing options of rescinding or upholding a finding.  Finally, the revised process allows institutions to file an appeal as to any compliance rating or finding issued to the institution.  The previous appeals process allowed institutions to appeal an adverse rating, but not other compliance ratings or findings.

The Bureau specifies that the revised supervisory appeals process will apply to appeals pending on the date that the revised process is published.