[Federal Register Volume 89, Number 36 (Thursday, February 22, 2024)]
[Rules and Regulations]
[Pages 13263-13265]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-03615]



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 Rules and Regulations
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 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
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  Federal Register / Vol. 89, No. 36 / Thursday, February 22, 2024 / 
Rules and Regulations  

[[Page 13263]]



CONSUMER FINANCIAL PROTECTION BUREAU

12 CFR Chapter X


Supervisory Appeals Process

AGENCY: Consumer Financial Protection Bureau.

ACTION: Supervisory appeals process; update.

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SUMMARY: The Consumer Financial Protection Bureau (CFPB or Bureau) is 
updating its internal supervisory appeals process for institutions 
seeking to appeal a compliance rating or an adverse material finding.

DATES: This revised supervisory appeals process is applicable as of 
February 22, 2024.

FOR FURTHER INFORMATION CONTACT: George Karithanom, Regulatory 
Implementation & Guidance Program Analyst, Office of Regulations, at 
(202) 435-7700 or [email protected]. If you require this 
document in an alternative electronic format, please contact 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Overview

    The CFPB first published its process for supervisory appeals on 
October 31, 2012, as Bureau Bulletin 2012-07.\1\ The process was 
substantially modeled upon the practices of the prudential regulators. 
On November 3, 2015, the Bureau revised its process, superseding the 
2012 Bulletin.\2\ The Bureau has reviewed its current process and the 
revisions made by prudential regulators since 2015. As a result, the 
Bureau is revising its process to broaden the Bureau officials eligible 
to evaluate appealed matters, the options for resolving an appeal, and 
the matters subject to appeal.
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    \1\ https://files.consumerfinance.gov/f/201210_cfpb_bulletin_supervisory-appeals-process.pdf.
    \2\ https://files.consumerfinance.gov/f/201510_cfpb_appeals-of-supervisory-matters.pdf.
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    The main changes in the revised supervisory appeals process, which 
is set out in part II below, are as follows. First, the revised 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 under the 
previous process. The Supervision Director will select three CFPB 
managers who meet the criteria to serve on the appeals committee, which 
will advise the Supervision Director on how to resolve the appeal. The 
CFPB's General Counsel will designate legal counsel to advise the 
committee. Second, under the revised process there is a new option for 
resolving the appeal, which is remanding the matter to Supervision 
staff for consideration of a modified finding, in addition to the 
existing options of upholding or rescinding the finding. Third, under 
the revised process institutions may file an appeal as to any 
compliance rating issued to the institution, not only an adverse rating 
(e.g., 3, 4, or 5 rating) as under the previous process. Finally, the 
revised process includes additional clarifying changes and specifies 
that it applies to appeals pending on the date it is published.

II. Appeals of Supervisory Matters 3
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    \3\ This supervisory appeals process 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) limit the CFPB 
Director's authority to provide direction to CFPB staff at any time; 
(3) constitute an interpretation of law; or (4) create or confer 
upon any person, including one who is the subject of CFPB 
supervisory, investigation or enforcement activity, any substantive 
or procedural rights or defenses that are enforceable in any manner.
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A. General Purpose

    To promote a constructive supervisory relationship with the 
financial service providers, including depository institutions, under 
its jurisdiction, the Consumer Financial Protection Bureau (CFPB or 
Bureau) provides a supervisory appeals process.
    Throughout the supervisory process, the CFPB and its supervised 
entities should engage in an open and candid dialogue on a continuing 
basis. During an examination or review, CFPB examiners and regional 
management should ensure that supervised entities understand examiner 
concerns and issues that arise. In turn, supervised entities should 
present all relevant information in a timely manner during the 
examination or review process to ensure that examiners' analyses are 
complete.
    After an examination or targeted review, if a supervised entity 
disagrees with a compliance rating \4\ or any underlying adverse 
findings set forth in the relevant examination report, or adverse 
findings set forth in a supervisory letter,\5\ the entity may appeal. 
The key aspects of the appeals process as outlined in this document 
are:
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    \4\ See the CFPB Supervision and Examination Manual's chapter on 
the examination process. http://www.consumerfinance.gov/guidance/supervision/manual/.
    \5\ Supervision may issue supervisory letters for its reviews of 
consumer compliance matters that do not result in the issuance of 
the compliance rating. Supervised entities may appeal adverse 
findings described in a supervisory letter in the same manner as 
such findings in an examination report. Adverse findings are those 
that result in a Matter Requiring Attention.
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     CFPB managers who did not participate in the supervisory 
matter and whose knowledge and background enable them to meaningfully 
evaluate supervisory matters will be involved in reviewing appeals;
     The CFPB will only entertain appeals in writing, with 
documentation supporting the appeal, and within specified timeframes; 
and
     The CFPB will take measures to ensure that an entity's 
filing of an appeal does not have an adverse effect on the entity's 
relationship with the CFPB.

B. Entities Who May Initiate Appeals

    Under the circumstances noted below, any entity subject to an 
examination under the CFPB's supervisory authority may use the appeals 
process.

C. Supervisory Matters Subject to Appeal

    An entity may appeal final CFPB compliance ratings or any 
underlying adverse findings, or adverse findings conveyed to an entity 
in a supervisory letter. Adverse findings are those that result in a 
Matter Requiring Attention by the board of directors or principal(s) of 
the entity.

[[Page 13264]]

    An entity may not use this supervisory appeals process to appeal:
     Preliminary supervisory matters (including preliminary 
findings);
     CFPB examiners' decisions to initiate supervisory 
measures, such as memoranda of understanding;
     Enforcement-related actions and decisions, including 
cease-and-desist orders and determinations to proceed with an 
investigation or public enforcement action;
     Adverse findings or an unsatisfactory rating contained in 
a supervisory letter or examination report related \6\ to a recommended 
or pending investigation or public enforcement action; \7\ or
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    \6\ A supervisory letter or an examination report is related to 
an investigation or enforcement action when it contains any part of 
the underlying facts and circumstances that form the basis of the 
investigation or enforcement action.
    \7\ After an investigation or enforcement action has been 
resolved, the supervisory findings in a related supervisory letter 
or examination report may be appealed. In that case, the date of 
resolution of the investigation or public enforcement action will be 
treated as the date of the email transmitting an appealable 
supervisory letter or examination report for the purpose of 
determining the deadline for a written record.
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     Referrals of information to other law enforcement and 
regulatory agencies.
    An entity may only appeal a finding once. For example, an entity 
that receives a rating in an examination report that is based on an 
earlier finding memorialized in a supervisory letter may appeal the 
letter or the report, but not both.

D. Pre-Appeal Resolution Efforts

    The CFPB expects its supervisory staff, including examiners and 
regional management, to discuss with supervised entities their 
preliminary findings and any proposed ratings before an examination or 
supervisory review is completed. In addition, the CFPB encourages 
supervised entities to fully engage in this dialogue and, when 
disagreements occur, to present all available information to support 
this position. Through such communication, the CFPB anticipates that 
most disputes can be resolved before an examination is final.

E. Appeal Process

    Within 30 business days of the date of the email transmitting an 
appealable examination report containing a compliance rating, or an 
appealable supervisory letter, the supervised entity may submit a 
written appeal via email to: [email protected].\8\ The 
subject line of the email should state the name of the supervised 
entity and include the words: ``APPEAL OF SUPERVISORY MATTER.'' The 
appeal request should include:
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    \8\ The date that the entity or CFPB receives by email any 
material referenced in this supervisory appeals process will be 
considered the receipt date.
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    a. A description of the issues in dispute and appropriate 
supporting information; \9\
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    \9\ If the staff reviewing the appeal notifies the supervised 
entity that the entity has not submitted sufficient supporting 
information, the entity will have 10 business days within which to 
resubmit the appeal with supporting information.
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    b. A summary of informal efforts made to resolve the dispute with 
examiners or other CFPB Supervision staff;
    c. A copy of a board resolution or other appropriate formal 
document issued by the entity's board of directors or principal(s), 
which authorizes the filing of an appeal; and
    d. A statement of whether or not the entity's board of directors or 
principal(s) requests an oral presentation to the CFPB. If an oral 
presentation is requested, a member of the board or principal must 
participate in and lead the oral presentation.
    This revised supervisory appeals process applies to any appeal 
pending with Supervision on the date it is published in the Federal 
Register.
    Within five business days of receipt of an appeal, the Supervision 
Director \10\ will designate a committee composed of three CFPB 
managers who were not involved in the supervisory matter being appealed 
and who have relevant experience on the issue raised by the appeal. The 
General Counsel \11\ will designate legal counsel to advise the 
committee. The committee will:
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    \10\ The position of ``Supervision Director'' encompasses the 
combined positions of the Assistant Director for Supervision Policy 
and the Assistant Director for Supervision Examinations. Previously, 
these positions were occupied by the same individual, and the Bureau 
is in the process of consolidating these two positions into one 
Supervision Director position. In this supervisory appeals process, 
the Supervision Director means the Supervision Director or another 
CFPB employee designated by the CFPB Director or by the Supervision 
Director.
    \11\ In this supervisory appeals process, the ``General 
Counsel'' means the General Counsel of the CFPB or that person's 
designee.
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    a. Review the supervised entity's written appeal, the examination 
report or supervisory letter at issue, and supporting documentation for 
both;
    b. If applicable, send a copy of the appeal to the prudential 
regulator of the appealing entity and solicit its views;
    c. Solicit input from other CFPB personnel, such as examination 
staff and CFPB Headquarters staff (including those involved in the 
specific matter under appeal); and
    d. Hear a presentation from the appealing entity,\12\ if requested.
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    \12\ Any such presentation must be brief and must be limited to 
issues raised in the written appeal.
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    The committee will review the supervisory letter or examination 
report for consistency with the policies, practices, and mission of the 
CFPB and the overall reasonableness of the examiners' determinations, 
and support offered for, the supervisory findings. Only the facts and 
circumstances upon which a supervisory finding was made will be 
considered by the committee. It is the appellant's burden to show that 
the contested supervisory findings should be modified or set aside.
    Upon conclusion of the review, the committee will advise the 
Supervision Director in formulating a written decision on the appeal. 
The decision may uphold or rescind the finding; alternatively, the 
decision may remand the finding to Supervision staff who will consider 
a modified finding. The decision will be transmitted to the appealing 
entity by email, copying appropriate internal parties and the 
prudential regulator or state regulator where appropriate. The CFPB 
expects that a decision will be issued within 60 business days from the 
assignment of the appeal to the committee, but the committee will 
notify the supervised entity by email if a longer period will be 
needed.
    The decision under the previous paragraph cannot be the subject of 
another appeal under this supervisory appeals process.

F. Confidentiality

    The appeals process will be confidential and submissions by 
supervised entities will be treated in accordance with the CFPB 
regulations and guidance on confidential supervisory information.\13\ 
The CFPB may in the future publish summaries of issues raised in 
appeals, and the outcomes of such appeals, in a manner that will 
protect from disclosure the identity of the appealing entity and any 
other confidential information.
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    \13\ 12 CFR 1070.40-48.
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G. Role of the CFPB Ombudsman Office

    The CFPB Ombudsman Office serves as an independent, impartial, and 
confidential resource. It will act as a liaison between supervised 
entities and the CFPB, providing information about the appeals process. 
The Ombudsman will facilitate resolution of any process-related issues 
before an appeal is filed with the CFPB and will address process-
related issues during the appeal. A supervised entity's reaching out to 
the

[[Page 13265]]

Ombudsman will not delay or stay any statutory, regulatory, or agency 
timeframes.

H. Effect on the Supervisory Relationship

    As noted previously, the CFPB encourages an open dialogue with its 
supervised entities and views appeals as one aspect of such dialogue. 
As such, the CFPB will take measures to ensure that an entity's filing 
of an appeal does not have a negative effect on its supervisory 
relationship with the CFPB. Any entity with concerns about its 
relationship with the CFPB should contact the CFPB's Ombudsman who will 
handle such concerns in a confidential manner, if requested. 
Information on how to contact the Ombudsman can be found at http://www.consumerfinance.gov/ombudsman/.

III. Regulatory Matters

    This supervisory appeals process is a rule of agency organization, 
procedure, or practice under the Administrative Procedure Act.\14\
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    \14\ 5 U.S.C. 553(b).
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    The CFPB has determined that this supervisory appeals process does 
not impose any new or revise any existing recordkeeping, reporting, or 
disclosure requirements on covered entities or members of the public 
that would be collections of information requiring approval by the 
Office of Management and Budget under the Paperwork Reduction Act.\15\
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    \15\ 44 U.S.C. 3501-3521.

Rohit Chopra,
Director, Consumer Financial Protection Bureau.
[FR Doc. 2024-03615 Filed 2-21-24; 8:45 am]
BILLING CODE 4810-AM-P