The CFPB will provide an exit interview after an examination to discuss potential problem areas. Companies then receive a verification of facts memo to confirm the CFPB's understanding before the report. The report details findings and required actions within timeframes. Companies must take the report seriously and develop comprehensive response plans on policies, procedures, training, audits, and staffing to address all issues within deadlines. Failure to adequately respond could lead to further regulatory actions from the CFPB.

1. Responding After
the CFPB
Examination
Justin B. Hosie

2. 1. The exit interview and waiting
2. Factual confirmation
3. The report
4. The timeline
5. Responding
6. The changes required
7. Addressing issues internally
8. Awaiting more from the CFPB
Overview

3. What happens when the CFPB
leaves?
 Opportunity for an exit interview
 Always take the opportunity
 Glean some insights into potential problem areas
 Several clients have reported feeling great at the exit
interview and feeling surprised at the exam report
 Long and unpredictable wait times after exams

4. Will you receive any info before the
exam report?
 Yes
 Key Example: “Verification of Facts Memos”
 CFPB effort to verify the facts as CFPB understands them and
 Give you a chance to clarify and supplement
• Directed to focus on facts as in-place during the examination
period
• Responses focused on future plans have very little impact
 Relatively short time-frame (appx 1 week)

5. What does a report look like?
 Template:
 http://www.consumerfinance.gov/f/201405_cfpb_exam-
report-supervisory-templates.pdf
 Some variations and changes to this template over time
 Key Considerations
 Confidential - 12 CFR Part 1070
 Conclusions and Comments
• Risk Assessment Score
• Consumer Compliance Rating
• Matters Requiring Attention: Immediate to 180
Days
 Review and Findings

6. How much time is there to
respond?
 General Timeline
 0-10 Days: Cease stated practices - Expect a CID
 30-60 Days: Often provided to “develop remediation” plans
 90-180 Days: Develop comprehensive programs
 Ambiguity. Undated directions sometimes appear to
be requirements, outside of the official “matters
requiring attention” section.

7. How do you respond?
 Your Board. Correspondence from the Company’s
Board of Directors / Members, etc.
 Minimal Extensions. CFPB has allowed reasonable
extensions when time periods fall on weekends and
holidays, to the next business day
 Be Punctual and Realistic. Develop a template and
meet every deadline
 Don’t overpromise
 Establish reasonable timelines when responding on plans

8. What is typically required?
 CFPB “supervisory highlights” Spring 2014, Summer 2013,
Winter 2013, and Fall 2012.
 Examples:
 good compliance policies, but no follow-through
 inadequate resources for compliance department
 lack of communication to personnel
 lack of training
 lack of Board supervision
 operations policies don’t match compliance policies
 no comprehensive service provider management
program
 deficient fair lending compliance program; employee
discretion problem
 failure to provide NOAA
 FDCPA and Third-Party Collections

9. What is the impact internally?
 Resources
 To respond: Time demands on internal and external legal and
compliance team
 To implement
• Documents. Revising policies, procedures, training, auditing
documentation
• People. Typically requires more staff:
• compliance personnel
• training staff
• compliance audit staff
• Outside Audit / Review. Cost of outside compliance auditing

10. What else can you expect after?
 Various possibilities, depending on circumstances:
 “Notice and Opportunity to Respond and Advise” (NORA)
 Await possible negotiations on
• Memorandum of Understanding
• Possible Civil Investigative Demand
• Enforcement action (lawsuit)
 Some hear very little until the next exam

11. Contact Information
Justin B. Hosie
Hudson Cook, LLP
6005 Century Oaks Drive
Suite 500
Chattanooga, TN 37416
(423) 490-7564
jhosie@hudco.com