[Federal Register Volume 85, Number 120 (Monday, June 22, 2020)]
[Rules and Regulations]
[Pages 37331-37333]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-13504]



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 Rules and Regulations
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  Federal Register / Vol. 85, No. 120 / Monday, June 22, 2020 / Rules 
and Regulations  

[[Page 37331]]



BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Chapter X


Advisory Opinions Pilot

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Procedural rule.

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SUMMARY: The Bureau of Consumer Financial Protection (Bureau) announces 
the establishment of a new pilot advisory opinion program (Pilot AO 
Program).

DATES: This procedural rule is applicable on June 22, 2020.

FOR FURTHER INFORMATION CONTACT: For additional information about the 
Pilot AO Program, contact Marianne Roth, Chief Risk Officer, Office of 
Strategy, at 202-435-7684. If you require this document in an 
alternative electronic format, please contact 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    Under the Dodd-Frank Wall Street Reform and Consumer Protection Act 
(Dodd-Frank Act),\1\ the Bureau's ``primary functions'' include issuing 
guidance implementing Federal consumer financial law.\2\ The Bureau 
believes that providing clear and useful guidance to regulated entities 
is an important aspect of facilitating markets that serve consumers.
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    \1\ Public Law 111-203, 124 Stat. 2081 (2010).
    \2\ 12 U.S.C. 5511(c)(5).
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    The Bureau currently issues several types of guidance regarding the 
statutes that it administers and regarding the regulations and Official 
Interpretations that it normally issues through the notice-and-comment 
process. On occasion, the Bureau provides guidance in interpretive 
rules or general statements of policy. The Bureau also routinely issues 
Compliance Aids that present legal requirements in a manner that is 
useful for compliance professionals, other industry stakeholders, and 
the public, or include practical suggestions for how entities might 
choose to go about complying with those requirements.\3\ Additionally, 
the Bureau provides individualized ``implementation support'' to 
regulated entities through its Regulatory Inquiries Function (RIF).\4\ 
Neither Compliance Aids nor the RIF are intended to interpret 
ambiguities in legal requirements.
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    \3\ See Policy Statement on Compliance Aids, 85 FR 4579 (Jan. 
27, 2020).
    \4\ See Bureau of Consumer Financial Protection Request for 
Information Regarding Bureau Guidance and Implementation Support 
(Guidance RFI), 83 FR 13959, 13961-62 (Apr. 2, 2018).
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    The Bureau is establishing the Pilot AO Program in response to 
feedback received from external stakeholders encouraging the Bureau to 
provide written guidance in cases of regulatory uncertainty. The Bureau 
received requests of this nature in comments submitted in response to 
the Request for Information Regarding Bureau Guidance and 
Implementation Support (Guidance RFI). The Guidance RFI noted, among 
other things, current Bureau forms of individualized support to 
regulated entities--principally the RIF--and asked whether the Bureau 
should consider an AO program to provide interpretations, including the 
particular scope and benefits of AOs that would be distinct from 
generalized frequently asked questions (FAQs), and the types of 
questions or issues that could or could not be appropriately dealt with 
by AOs.\5\
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    \5\ Guidance RFI, at 13964.
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    In response to the Guidance RFI, several respondents recommended 
the Bureau issue such AOs. Commenters that supported AOs wrote that a 
Bureau AO program would reduce ambiguity and increase regulatory 
certainty, support proactive consumer protection, and enhance 
timeliness of guidance. Several of these commenters suggested that AOs 
be binding, ultimately be incorporated into a central location (like 
the Official Interpretations to Bureau regulations), and be accessible 
and useful to third parties as well as requestors.
    Other commenters responded to the Guidance RFI and opposed the 
issuance of AOs. They had three primary objections: First, that AOs 
will not provide the public with meaningful additional assistance in 
understanding legal requirements; second, that AOs could create 
confusion; and third, that interpretations are better made via notice 
and comment.
    Comments on the Bureau's Proposed Policy on No-Action Letters and 
the BCFP Product Sandbox \6\ also addressed whether the Bureau should 
include an interpretive letter (IL) or AO program to the Compliance 
Assistance Sandbox (CAS). Commenters supporting the inclusion of an IL 
or AO program to the CAS said that the Bureau could further compliance 
and clarify regulatory expectations by issuing interpretive legal 
opinions in circumstances warranting further legal clarity on a 
particular practice or activity. They noted that other regulatory 
agencies provide for opinions of this kind. A commenter opposing the 
inclusion of an IL or AO program to the CAS reiterated the objections 
made by commenters on the Guidance RFI that AOs could increase 
confusion and that interpretations are better made via notice and 
comment.
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    \6\ See Bureau of Consumer Financial Protection Policy on No-
Action Letters and the BCFP Product Sandbox, 83 FR 64036-64045 (Dec. 
13, 2018).
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    After considering these comments, the Bureau is establishing the 
Pilot AO Program to provide guidance with interpretive content that is: 
Focused 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. The Bureau appreciates the concerns 
raised by some commenters on the Guidance RFI and the CAS about an AO 
program. With respect to concerns that AOs would not provide meaningful 
assistance to stakeholders regarding the interpretation of legal 
requirements, the Bureau believes that the comments described above 
indicate that there is meaningful demand for the resolution of 
regulatory uncertainty beyond the Bureau's existing tools for issuing 
guidance. Accordingly, the Pilot AO Program can help enhance 
compliance. With respect to comments that AOs could create confusion, 
the Bureau believes that clear communication of the status of AOs 
issued under the Pilot AO Program as interpretive rules under the 
Administrative Procedure Act (APA) will minimize potential for 
confusion as

[[Page 37332]]

to the significance of different types of guidance. Further, AOs will 
be signed by the Director, addressing concerns that an AO program could 
lead to the proliferation of conflicting staff-level opinions.
    With respect to comments regarding the importance of notice and 
comment, the Bureau agrees that broad stakeholder input is valuable in 
many contexts. As explained below, the Bureau does not intend to issue 
advisory opinions on issues that are better addressed through the 
notice-and-comment process. However, as the APA contemplates by 
exempting interpretive rules from notice-and-comment requirements, the 
Bureau also believes that there are contexts where it is appropriate to 
interpret the applicable law through timely guidance without needing to 
engage in a sometimes-lengthy notice-and-comment process.
    The Bureau is initiating its program for AOs in the form of a 
pilot, which will allow the Bureau to gain additional experience with 
AOs. Public comments on the Bureau's concurrent proposal, together with 
the Bureau's experience with the pilot, will inform how the Bureau uses 
AOs in the future.

II. Parameters of the Pilot AO Program

A. Overview

    The primary purpose of the Pilot AO Program is to provide a 
mechanism through which the Bureau may more effectively carry out its 
statutory purposes and objectives by better enabling compliance in the 
face of regulatory uncertainty. Under the program, parties will be able 
to request interpretive guidance, in the form of an AO, to resolve such 
regulatory uncertainty.\7\
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    \7\ For convenience, this document uses the term ``regulatory 
uncertainty'' to encompass uncertainty with respect to regulatory 
or, where applicable, statutory provisions.
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B. Submission and Content of Requests

    Requests may be submitted via email to [email protected], or 
through other means designated by the Bureau.\8\ Requests must identify 
the requestor.\9\ Where information submitted to the Bureau is 
information the requestor would not normally make public, the Bureau 
intends to treat it as confidential pursuant to its rule, Disclosure of 
Records and Information,\10\ to the extent applicable. The Bureau 
encourages requestors to identify any such information to the extent 
they choose to include it in their submissions. For the pilot program, 
requestors will be limited to covered persons or service providers that 
are subject to the Bureau's supervisory authority under sections 1024, 
1025, or 1026(e) of the Dodd-Frank Act or subject to the Bureau's 
enforcement authority under subtitle E of the Dodd-Frank Act.\11\ The 
Bureau will not accept requests from third parties, such as trade 
associations or law firms, on behalf of unnamed entities as part of the 
pilot program.
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    \8\ Applications should not include sensitive personal 
information, such as account numbers or Social Security numbers, or 
names of other individuals.
    \9\ The Bureau notes that during the Pilot AO Program, 
requestors are not required to include the additional information 
set out in the Bureau's separate Federal Register document regarding 
the Proposed AO Program.
    \10\ 12 CFR 1070.
    \11\ 12 U.S.C. 5514, 5515, 5516(e), 5561-5567.
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C. Characteristics of AOs

    AOs under the pilot program will be interpretive rules under the 
APA \12\ that respond to a specific request for clarity on an 
interpretive question. The Bureau will publish AOs in the Federal 
Register and on consumerfinance.gov, including the Bureau's summary of 
the material facts and the Bureau's legal analysis of the issue.\13\ 
Unless otherwise stated, each AO will be applicable to the requestor 
and to similarly situated parties to the extent that their situations 
conform to the Bureau's summary of material facts in the AO.\14\
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    \12\ 5 U.S.C. 553(b).
    \13\ An AO will not necessarily adopt any proposed 
interpretation offered by the requestor. The Bureau retains the 
discretion to answer requests with its own interpretation regardless 
of the proposed interpretation of the requestor.
    \14\ Accordingly, the initial request drafted by the requestor 
is not necessarily a reliable guide to the scope or terms of an AO; 
the scope and terms of an AO will be set out in the AO itself. 
Moreover, the Bureau will not normally investigate the underlying 
facts of the requestor's situation, and an AO is not applicable to 
the requestor if the underlying facts of the requestor's situation 
do not conform to the Bureau's summary of material facts.
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    Where a statutory safe harbor is applicable to an AO, the AO will 
explain that fact. The Truth in Lending Act (TILA), Equal Credit 
Opportunity Act (ECOA), Electronic Fund Transfer Act (EFTA), and Real 
Estate Settlement Procedures Act (RESPA) provide certain protections 
from liability for acts or omissions done in good faith in conformity 
with an interpretation by the Bureau.\15\ The Fair Debt Collection 
Practices Act (FDCPA) contains similar protections, specifically using 
the term ``advisory opinion.'' \16\
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    \15\ See 15 U.S.C. 1640(f) (TILA); 15 U.S.C. 1691e(e) (ECOA); 15 
U.S.C. 1693m(d) (EFTA); 12 U.S.C. 2617, 12 CFR 1024.4 (RESPA).
    \16\ See 15 U.S.C. 1692(k)(e) (FDCPA).
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D. Factors in Bureau Selection of Topics for AOs

    The Bureau intends to consider the following factors as part of its 
consideration of whether to address topics through AOs.\17\ The Bureau 
will prioritize open questions within the Bureau's purview that can 
legally be addressed through an interpretive rule, where an AO is an 
appropriate tool relative to other Bureau tools for resolving that 
question. Initial factors weighing for the appropriateness of an AO 
include: That the interpretive issue has been noted during prior Bureau 
examinations as one that might benefit from additional regulatory 
clarity; that the issue is one of substantive importance or impact or 
one whose clarification would provide significant benefit; and/or that 
the issue concerns an ambiguity that the Bureau has not previously 
addressed through an interpretive rule or other authoritative source. 
Factors weighing strongly for a presumption that an AO is not an 
appropriate tool include: That the interpretive issue is the subject of 
an ongoing Bureau investigation or enforcement action; that the 
interpretive issue is the subject of an ongoing or planned rulemaking; 
that the issue is better suited for the notice-and-comment process; 
that the issue could be addressed effectively through a Compliance Aid; 
or that there is clear Bureau or court precedent that is already 
available to the public on the issue.
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    \17\ The following are factors that the Bureau intends to weigh 
when deciding which topics to prioritize in the AO program, based on 
all of the information available to the Bureau. AO requests need not 
address these factors in order to be fully considered by the Bureau.
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    The Bureau intends to further evaluate potential topics for AOs 
based on additional factors, including: Alignment with the Bureau's 
statutory objectives; size of the benefit offered to consumers by 
resolution of the interpretive issue; known impact on the actions of 
other regulators; and impact on available Bureau resources. The Pilot 
AO Program will primarily focus on the following statutory objectives 
of the Bureau: (1) That consumers are provided with timely and 
understandable information to make responsible decisions about 
financial transactions; (2) that outdated, unnecessary, or unduly 
burdensome regulations are regularly identified and addressed in order 
to reduce unwarranted regulatory burdens; (3) that Federal consumer 
financial law is enforced consistently, without regard to the status of 
a person as a depository

[[Page 37333]]

institution, in order to promote fair competition; and (4) that markets 
for consumer financial products and services operate transparently and 
efficiently to facilitate access and innovation.\18\
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    \18\ See 12 U.S.C. 5511(b)(1), (3)-(5). The Bureau has a further 
statutory objective, that consumers are protected from unfair, 
deceptive, or abusive acts and practices (UDAAPs) and from 
discrimination. 12 U.S.C. 5511(b)(2). The Bureau considers this 
objective to be at least as important as its other objectives, and 
it does not plan to issue an AO that is in conflict with this 
objective. But because other regulatory tools are often more 
suitable for addressing UDAAPs and discrimination, the Bureau has 
chosen not to highlight this objective as a primary focus when 
selecting issues for the Pilot AO Program.
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    The Pilot AO Program will focus primarily on clarifying ambiguities 
in the Bureau's regulations, although AOs may clarify statutory 
ambiguities. The Bureau will not issue AOs on issues that require 
notice-and-comment rulemaking under the APA,\19\ or that are better 
addressed through that process. For example, the Bureau does not intend 
to issue an advisory opinion that would change a regulation. Similarly, 
where a regulation or statute establishes a general standard that can 
only be applied through highly fact-intensive analysis, the Bureau does 
not intend to replace it with a bright-line standard that eliminates 
all of the required analysis. Highly fact-intensive applications of 
general standards, such as of the statutory prohibition on unfair, 
deceptive, or abusive acts or practices, pose particular challenges for 
issuing advisory opinions, although there may be times when the Bureau 
is able to offer advisory opinions that provide additional clarity on 
the meaning of such standards.
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    \19\ 5 U.S.C. 553(b).
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III. Regulatory Requirements

    The Bureau has concluded that the Pilot AO Program constitutes a 
rule of agency organization, procedure, or practice, and that it is, 
therefore, exempt from the notice-and-comment rulemaking requirements 
of the APA.\20\ For the same reason, it is not subject to the 30-day 
delayed effective date for substantive rules under section 553(d) of 
the APA.\21\ Because no notice of proposed rulemaking is required, the 
Regulatory Flexibility Act does not require an initial or final 
regulatory flexibility analysis.\22\
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    \20\ 5 U.S.C. 553(b).
    \21\ 5 U.S.C. 553(d).
    \22\ 5 U.S.C. 603(a), 604(a).
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IV. Signing Authority

    The Director of the Bureau, having reviewed and approved this 
document, is delegating the authority to electronically sign this 
document to Laura Galban, a Bureau Federal Register Liaison, for 
purposes of publication in the Federal Register.

    Dated: June 18, 2020.
Laura Galban,
Federal Register Liaison, Bureau of Consumer Financial Protection.
[FR Doc. 2020-13504 Filed 6-19-20; 8:45 am]
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