Alert November 15, 2011

CFPB to Provide Advance Warning Prior to Most Enforcement Actions

The CFPB issued a release informing institutions and individuals that it will provide an early warning notice before initiating a formal legal proceeding for an alleged violation of a consumer financial protection law.  The CFPB noted that the early warning notice is not required by law and its use will be discretionary.  Enforcement staff will have the ability to bypass providing a notice when prompt action is deemed necessary.  An advance notice will be accompanied by evidence of the alleged violation, and the recipient of such notice will have 14 days to submit a written response to the CFPB, which may include any relevant legal or policy arguments and facts in response to the alleged violation.  Factual assertions included in any written response must be made under oath by someone with personal knowledge of such facts, and responses will be discoverable by third parties.  The CFPB will decide whether to proceed with an enforcement action following its review of a written response.