On April 20, 2018, the Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC) each announced settlements totaling $1 billion with a national bank resulting from a coordinated action between the two agencies.
The OCC found that deficiencies in the bank’s enterprise-wide compliance risk management program constituted reckless, unsafe, or unsound practices in violation of Section 5 of the Federal Trade Commission (FTC) Act. Among other deficiencies, the bank failed to execute on a comprehensive compliance risk management plan, fill critical compliance positions with sufficiently qualified individuals, and adequately report to the Board regarding compliance and regulatory concerns. In addition, the OCC found that the bank’s improper placement of force-placed insurance on auto loans and practice of charging borrowers mortgage-interest-rate-lock extension fees when the bank was responsible for the failure of the loan to close, in violation of its policy at the time, constituted unfair acts in violation of the FTC Act. The bank agreed to pay a $500 million civil money penalty, provide restitution to harmed consumers, and implement an effective compliance risk management program.
According to the CFPB consent order, the Bureau found that certain of those same practices constituted violations of the Consumer Financial Protection Act’s (CFPA) prohibition on unfair, deceptive and abusive acts and practices (UDAAP). Specifically, the CFPB concluded that the bank had unfairly failed to follow its mortgage-interest-rate-lock policy, and unnecessarily charged borrowers for force-placed insurance in connection with auto loans. The bank did not admit any wrongdoing, but agreed to cease the challenged practices, remediate harmed consumers, and pay a $1 billion civil money penalty to the CFPB. The CFPB agreed to credit the bank’s $500 million payment to the OCC against this penalty.