[Federal Register Volume 77, Number 242 (Monday, December 17, 2012)]
[Proposed Rules]
[Pages 74625-74628]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-30159]


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BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Chapter X

[Docket No. CFPB-2012-0046]


Policy To Encourage Trial Disclosure Programs; Information 
Collection

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Notice of proposed policy and proposed information collection; 
request for comment.

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SUMMARY: The Bureau of Consumer Financial Protection (Bureau) invites 
the general public and other Federal agencies to take this opportunity 
to comment on its proposed Policy to Encourage Trial Disclosure 
Programs (Policy), which is intended to carry out the Bureau's 
authority under Section 1032(e) of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act of 2010 (Dodd-Frank Act), and also a 
proposed information collection associated with applications submitted 
by companies seeking Bureau approval to conduct trial disclosure 
programs 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 15, 2013 to be assured of consideration.

ADDRESSES: Submit comments on the proposed Policy by any of the 
following methods:
     Electronic: http://www.regulations.gov. Follow the 
instructions on this site for submitting comments.
     Mail/Hand Delivery/Courier: Monica Jackson, Office of the 
Executive Secretary, Consumer Financial Protection Bureau, 1700 G 
Street NW., Washington, DC 20552.
    Submit comments on the proposed information collection by any of 
the following methods:
     Electronic: [email protected].
     Mail/Hand Delivery/Courier: Direct all written comments to 
Consumer Financial Protection Bureau (Attention: PRA Office), 1700 G 
Street NW., Washington, DC 20552.
    Instructions: Submissions should include agency name and the title 
``Policy to Encourage Trial Disclosure Programs; Information 
Collection.'' 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 Time. You can make 
an appointment to inspect comments by telephoning (202) 435-7275. All 
comments, including any attachments and other supporting materials, 
will become part of the public record and subject to public disclosure. 
For this reason, please do not include in your comments information of 
a confidential nature, such as sensitive personal information or 
proprietary information. You should only submit information that you 
wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: For additional information about the 
proposed information collection, contact the Consumer Financial 
Protection Bureau, (Attention: PRA Office), 1700 G Street NW., 
Washington, DC 20552, (202) 435-9011, or through the Internet at [email protected]. For additional information about the

[[Page 74626]]

proposed Policy, contact Will Wade-Gery, Research, Markets & 
Regulations Division, Bureau of Consumer Financial Protection, (202) 
435-7700.

SUPPLEMENTARY INFORMATION: No waiver will issue under the Policy until 
the Office of Management and Budget approves the proposed information 
collection and the Policy is finalized in light of comments received.
    Title: Policy to Encourage Trial Disclosure Programs; Information 
Collection.
    Office of Management and Budget (OMB) Control Number: 3170-XXXX.
    Abstract: In subsection 1032(e) of the Dodd-Frank Act, 12 U.S.C. 
5532(e), Congress gave the Bureau authority to provide certain legal 
protections to companies to conduct trial disclosure programs. This 
authority can be used to help further the Bureau's statutory objective, 
stated in subsection 1021(b)(5) of the Act, to ``facilitate access and 
innovation'' in the ``markets for consumer financial products and 
services.''
    In line with this authority, the Bureau is proposing the Policy 
that is laid out in full in the next section of this Notice. Under the 
proposed Policy, if the Bureau approves a specific trial, then, for the 
duration of an agreed testing period, the Bureau will deem the testing 
company's disclosure, to the extent that it is used solely by the 
testing company under the terms and conditions approved by the Bureau, 
to be in compliance with, or hold it exempt from, applicable federal 
disclosure requirements. The Bureau believes that there may be 
significant opportunities to enhance consumer protection by 
facilitating innovation in financial products and services and enabling 
companies to research informative, cost-effective disclosures. The 
Bureau also recognizes that in-market testing, involving companies and 
consumers in real world situations, may offer particularly valuable 
information with which to improve disclosure rules and model forms. The 
Bureau seeks comments on any aspect of this proposed Policy.
    The Bureau is also seeking comments on the information to be 
submitted to the Bureau by any company that is seeking Bureau approval 
of a proposed trial disclosure program under the proposed Policy. The 
proposed Policy lays out eligibility criteria for trial programs, which 
require companies proposing such tests to provide certain information 
to the Bureau. The Bureau invites the public to comment on all aspects 
of the proposed information collection that would be occasioned by 
these eligibility criteria.
    Type of Information Collection Review: New collection.
    Average Expected Annual Number of Information Collection 
Activities: 1.
    Information Collection--Affected Public: Business or other for-
profit or not-for-profit institutions.
    Estimated Number of Respondents: 2-10.
    Estimated Time per Respondent: 10 hours.
    Frequency of Response: 1.
    Estimated Total Annual Burden Hours: 20-100.

Proposed Policy To Encourage Trial Disclosure Programs

    The text of the proposed Policy is laid out in full below.
    Consumers need timely and understandable information to make the 
financial decisions that they believe are best for themselves and their 
families. Much federal consumer protection law rests on the premise 
that accurate and effective disclosures are critical in helping 
Americans understand the costs, benefits, and risks of different 
consumer financial products and services. In Section 1032 of the Dodd-
Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), 
Congress gave the Consumer Financial Protection Bureau (Bureau) 
authority to develop rules to ensure that consumers receive such 
disclosures, as well as model forms to help companies comply with those 
rules.\1\
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    \1\ See 12 U.S.C. 5532(a)-(d).
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    In subsection 1032(e) of the Dodd-Frank Act, Congress also gave the 
Bureau authority to approve ``trial disclosure programs.'' \2\ This 
authority can be used to help further the Bureau's statutory objective, 
stated in subsection 1021(b)(5) of the Dodd-Frank Act, to ``facilitate 
access and innovation'' in the ``markets for consumer financial 
products and services.'' In particular, Congress empowered the Bureau 
to provide a legal ``safe harbor'' to companies testing revised 
disclosures. For disclosure trials it approves, therefore, the Bureau 
will ``deem'' a participating company ``to be in compliance with'' or 
``exempt from'' otherwise applicable federal disclosure requirements 
for a defined period.\3\ The Bureau believes that there may be 
significant opportunities to enhance consumer protection by 
facilitating innovation in financial products and services and by 
enabling responsible companies to research informative, cost-effective 
disclosures in test programs. We also recognize that ``in-market'' 
testing, involving companies and consumers in real world situations, 
may offer particularly valuable information with which to improve 
disclosure rules and model forms.
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    \2\ 12 U.S.C. 5532(e).
    \3\ 12 U.S.C. 5532(e)(2). For convenience, this statutory 
authority to deem companies in compliance with or to exempt them 
from disclosure requirements--in each case for a limited period of 
time--is hereinafter referred to as the authority to issue 
``waivers'' for approved programs.
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    Accordingly, the Bureau is releasing its proposed Policy on trial 
disclosure programs.\4\ Our intent is for the Policy to encourage 
banks, thrifts, credit unions, and other financial services companies 
to innovate by proposing and conducting such programs.\5\ The 
information generated by such programs may then help the Bureau to 
establish more effective disclosure rules and practices.\6\
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    \4\ The Bureau may permit a covered person or covered persons to 
conduct a trial disclosure program ``subject to specified standards 
and procedures.'' 12 U.S.C. 5532(e)(1).
    \5\ The Policy is not intended to nor should it be construed to: 
(1) Restrict or limit in any way the CFPB's discretion in exercising 
its authorities; (2) constitute an interpretation of law; or (3) 
create or confer upon any covered person (including one who is the 
subject of CFPB supervisory, investigation or enforcement activity) 
or consumer, any substantive or procedural rights or defenses that 
are enforceable in any manner. Of course, if the Bureau approves a 
waiver in connection with a trial disclosure program, the terms of 
its approval will specify certain legal rights granted to the 
recipient or recipients of the waiver. Those rights, however, are 
based on the approval notice, and not on the present policy 
guidance.
    \6\ The Policy should not be viewed as substituting for the 
normal process of rulemaking. In the event that information learned 
from trial disclosure programs triggers or otherwise informs follow-
on rulemaking, the Bureau would follow the standard rulemaking 
process, which affords the public the opportunity of submitting 
comments on a proposed regulation.
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    The policy has four sections:
     Section A describes which proposed programs will be 
considered eligible for a temporary waiver;
     Section B lists factors the Bureau may consider in 
deciding which eligible programs to approve for such a waiver;
     Section C describes the Bureau's procedures for issuing 
waivers; and
     Section D describes how we will disclose information about 
these programs.

A. Eligibility

    Trial disclosure program proposals should be submitted in writing 
to the Bureau. To be considered eligible for a waiver, a proposal 
should:
    1. Describe the disclosures that are to be tested; \7\
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    \7\ So long as otherwise consistent with the minimum eligibility 
standards, new disclosures could include modifications to an 
existing model form, changed delivery mechanisms, wholesale 
replacement of a model form or existing disclosure requirements with 
new disclosure requirements or forms, and/or the elimination of 
select disclosure requirements. All proposals should include a copy 
of the trial disclosures to be tested and a clear statement of how 
they would be provided to consumers.

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[[Page 74627]]

    2. Describe how these changes are expected to improve upon existing 
disclosures,\8\ particularly with respect to consumer understanding 
and/or cost-effectiveness; \9\
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    \8\ The relevant existing disclosures are those made in 
accordance with disclosure rules issued either under the authority 
of Section 1032(a) or to implement an enumerated consumer law. See 
12 U.S.C. 5481(12).
    \9\ Trial disclosures should be ``designed to improve upon'' 
existing disclosures. (12 U.S.C. 5532(e)(1).) Intended improvements 
may go to consumer understanding of the relevant product or service 
and/or to the cost-effectiveness of disclosures. The Bureau 
anticipates approving trial disclosure programs that are intended to 
improve both consumer understanding and cost-effectiveness.
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    3. Provide a reasonable explanation for expecting these 
improvements;
    4. Provide metrics for testing whether such improvements are 
realized;
    5. Identify the duration of the test and the size, location, and 
nature of the consumer population involved in the test, and explain why 
that duration and scope are reasonably necessary for sound testing;
    6. Identify with particularity which current rules or enumerated 
consumer laws are to be temporarily waived in connection with the trial 
disclosure program; \10\
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    \10\ Under subsection 1032(e)(2), the Bureau has authority to 
waive ``a requirement of a rule or an enumerated consumer law,'' as 
that term is defined in the Dodd-Frank Act. See 12 U.S.C. 5481(12). 
As used in subsection 1032(e)(2), the term ``rule'' includes: (i) 
rules implementing an enumerated consumer law; and (ii) rules 
implementing the Consumer Financial Protection Act of 2010, 
including rules promulgated by the Bureau under its authority to 
prevent unfair, abusive, or deceptive acts or practices, or to 
enable full, accurate and effective disclosure.
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    7. Identify any third-party vendors to be used in connection with 
the proposed program and describe their proposed role;
    8. Contain a commitment to sharing test result data \11\ with the 
Bureau;
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    \11\ The proposal should commit to sharing test result data with 
the Bureau at the end of the program. In addition, it should contain 
either (1) a commitment to sharing with the Bureau interim data on 
test results during the course of the program, or (2) an explanation 
for why such interim data cannot reasonably be provided.
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    9. Acknowledge that the Bureau may revoke any approved waiver if 
the program violates the terms and conditions under which the Bureau 
approves the program; and
    10. Explain how the company will address disclosure requirements 
for the test population at the conclusion of the test period.

B. Approval of Proposals for Waivers

    To decide whether to approve a proposed program for a waiver,\12\ 
the Bureau may take account of a number of factors, including:
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    \12\ The decision whether to approve a proposed program for a 
waiver will be within the Bureau's sole discretion. The Bureau will 
review reasonable requests to reconsider its position on programs 
for which it has not approved a waiver.
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    1. The extent to which the program may help the Bureau develop 
disclosure rules or policies that better enable consumers to understand 
the costs, benefits, and risks associated with consumer financial 
products or services;
    2. The extent to which the program may help the Bureau develop 
rules or policies to correct or mitigate market failure;
    3. The extent to which the program may help the Bureau develop more 
cost-effective disclosure rules or policies;
    4. The extent to which the program controls for and mitigates risks 
to consumers; \13\
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    \13\ This includes the extent to which a proposal contains 
reasonable contingency plans for addressing unanticipated consumer 
harms that arise during the duration of the test.
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    5. The strength of the company's compliance management system 
relative to the size, nature, and complexity of the company's consumer 
business;
    6. How effectively and efficiently the program will test for 
potential improvements to consumer understanding and/or the cost-
effectiveness of disclosures, and how narrowly the program is tailored 
to the testing objectives;
    7. The extent to which existing data or other evidence indicate 
that the proposed changes will realize the intended improvements; and
    9. The extent to which the company intends to permit public 
disclosure of test results.
    In reviewing and approving applications, the Bureau will also take 
into consideration the scope and nature of programs currently underway 
as well as the Bureau's currently available resources.

C. Waiver Procedures for Approved Programs

    When the Bureau approves a waiver, it will provide the company or 
companies that receive the waiver with the specific terms and 
conditions of its approval.\14\ Waivers will require companies to 
certify, and document or otherwise demonstrate to the Bureau, their 
compliance with these approved terms and conditions. If a company does 
not follow the terms and conditions of the waiver, the Bureau may 
revoke the waiver in whole or in part.\15\
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    \14\ If the Bureau determines not to approve a proposed trial 
program, it will inform the company of its determination.
    \15\ If the Bureau revokes or partially revokes a waiver for 
failure to follow the waiver's terms, it will do so in writing and 
it will specify the reason or reasons for its action. The Bureau may 
offer an opportunity to correct any such failure before revoking a 
waiver.
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    Waiver terms and conditions will be in writing in an integrated 
document entitled ``1032(e) Trial Disclosure Waiver: Terms and 
Conditions.'' This document will be signed by the Director of the 
Bureau or by his or her designee, and by an officer of each company 
approved for a waiver in connection with the program.
    In addition, the document will:
    1. List the company or companies that are receiving a waiver;
    2. Specify the temporary duration of the waiver;
    3. Specify the rules and statutory provisions that the Bureau will 
waive during the test period for the testing company or companies;
    4. Describe and delineate the test population;
    5. Specify the changed disclosure or disclosures to be used; and
    6. List any other conditions on the effectiveness of the waiver, 
such as the terms of testing, data sharing, certification of compliance 
with the terms of the waiver, and/or public disclosure.

D. Bureau Disclosure of Information Regarding Trial Programs

    The Bureau will publish notice on its Web site of any trial 
disclosure program that it approves for a waiver. The notice will: (i) 
Identify the company or companies conducting the trial disclosure 
program; (ii) summarize the changed disclosures to be used, their 
intended purpose, and the duration of their intended use; (iii) 
summarize the scope of the waiver and the Bureau's reasons for granting 
it; and (iv) state that the waiver only applies to the testing company 
in accordance with the approved terms of use.
    Public disclosure of any other information regarding trial programs 
is governed by the Bureau's Interim Final Rule on Disclosure of Records 
and Information.\16\ For example, the rule requires the Bureau to make 
available records requested by the public unless they are subject to a 
FOIA exemption or exclusion.\17\ To the extent the Bureau wishes to 
disclose information regarding trial programs, the terms of such 
disclosure will be included in the 1032(e) Trial Disclosure Waiver: 
Terms

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and Conditions document. Consistent with applicable law and its own 
rules, the Bureau will not seek to disclose any test data that would 
conflict with consumers' privacy interests.
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    \16\ See 12 CFR 1070 et seq.
    \17\ See 12 CRF 1070.14.
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Request for Comments
    Comments are invited with respect to the proposed Policy and/or the 
related information collection effected by the application process for 
potential approval of a proposed trial disclosure program. All comments 
will become a matter of public record.
    Comments related to the proposed information collection will be 
summarized and/or included in the request for OMB approval. With 
respect to the information collection, 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 shall have practical utility; (b) the accuracy of the 
Bureau's estimate of the burden of the collection of information, 
including the validity of the methodology 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, 
electronic, mechanical or other technological collection techniques or 
other forms of information technology, e.g., permitting electronic 
submission of responses. An agency may not conduct or sponsor, and a 
person is not required to respond to, a collection of information 
unless it displays a currently valid OMB control number.

    Dated: December 10, 2012.
Garry Reeder,
Chief of Staff, Bureau of Consumer Financial Protection.
[FR Doc. 2012-30159 Filed 12-14-12; 8:45 am]
BILLING CODE 4810-AM-P