The Consumer Financial Protection Bureau (CFPB or Bureau) issued a policy statement on October 5 establishing a process to allow for early termination of consent orders. The policy statement is applicable on October 8, 2020.
The Dodd-Frank Act provides that the Bureau may enter into administrative consent orders where the Bureau has identified violations of federal consumer financial law. Consent orders, which generally have a five-year term, describe the Bureau’s findings and conclusions concerning the identified violations by an entity and generally impose injunctive relief, monetary relief, penalties, and reporting, recordkeeping, and cooperation requirements.
The policy statement outlines the early termination application process for entities subject to a consent order and the standards that the Bureau intends to use when evaluating applications. In order for a consent order to be terminated early, an entity should demonstrate that it meets certain threshold eligibility criteria, has fully complied with the terms of the consent order, and has a satisfactory compliance management system in applicable areas. Bureau staff will review applications and make recommendations to the CFPB director about whether to terminate a consent order. Under the policy, the CFPB director retains “complete discretion” on whether to grant an application. The policy also is not binding on the Bureau.
In addition to the above criteria, this process does not apply to consent orders approved by a court, which are, of course, covered by Federal Rule of Civil Procedure 60; it only applies to consent orders issued and approved by the CFPB pursuant to its administrative process. Only entities are eligible to apply for early termination under this policy; individuals (i.e., natural persons) are not eligible. While noting it would be “rare” for it to grant an early termination, the Bureau recognizes the burden of a consent order in terms of cost, potential limits on consumer choice, and ongoing cost to the Bureau of monitoring compliance with consent orders.
This policy has little legal significance, but does serve to alert those who have reached settlements with the Bureau that they may seek revisions, including change. It has always been the case and would generally be not only within the CFPB director’s power, but his or her duty, to consider requests from any citizen. Nonetheless, having a process with expectations laid out may make the effort go forward with better and broader effect.
Based on the Bureau’s stated criteria, it would appear to require exceptional circumstances for the Bureau to approve of an early termination of a consent order against an entity, especially when to do so would also require minimizing the risk of new violations of law or harm to consumers. However, the policy could provide entities with an incentive to fully and promptly comply with Bureau consent orders and to improve their compliance management systems to avoid additional violations.