Tuesday, November 8, 2011

CFPB Issues “Early Warning Notice” Procedures

On November 7, 2011, the Consumer Financial Protection Bureau (CFPB) issued its Bulletin 2011-04 (Enforcement), announcing plans to provide early warning of possible enforcement actions.
This CFPB bulletin outlined plans to provide advance notice of potential enforcement actions to individuals and firms under investigation, through a public notice process, called the Early Warning Notice.
The Early Warning Notice process is meant to allow the subject of an investigation to respond to any potential legal violations that CFPB enforcement staff believes have been committed before the Bureau ultimately decides whether to begin legal action.
The CFPB claims that the Early Warning Notice process is modeled on similar procedures that have been successful at other federal agencies.
The process begins with the Office of Enforcement explaining to individuals or firms that evidence gathered in a CFPB investigation indicates they have violated consumer financial protection laws.
Recipients of an Early Warning Notice are then invited to submit a response in writing, within 14 days, including any relevant legal or policy arguments and facts.
In July, the CFPB’s Office of Enforcement made public its rules regarding the initiation and execution of enforcement investigations.
The Early Warning Notice is not required by law, but CFPB believes it will promote even-handed enforcement of consumer financial laws. The decision to give notice in particular cases is discretionary and will depend on factors such as whether prompt action is needed.
Before the Office of Enforcement recommends that the CFPB commence enforcement proceedings, the Office of Enforcement may give the subject of such recommendation notice of the nature of the subject's potential violations and may offer the subject the opportunity to submit a written statement in response.
The decision whether to give such notice is discretionary, and a notice may not be appropriate in some situations, such as in cases of ongoing fraud or when the Office of Enforcement needs to act quickly.
The objective of the notice is to ensure that potential subjects of enforcement actions have the opportunity to present their positions to the CFPB before an enforcement action is recommended or commenced.
The primary focus of the written statement in response should be legal and policy matters relevant to the potential enforcement proceedings.
Any factual assertions relied upon or present in the written statement must be made under oath by someone with personal knowledge of such facts.
Submissions may be discoverable by third parties in accordance with applicable law.
The written statement must:
-Be submitted on 8.5 by 11 inch paper
-Double spaced
-At least 12-point type
-No longer than 40 pages
-Be received by the CFPB no more than 14 calendar days after the Notice.
The written response statement should be sent to the CFPB staff conducting the investigation, and must clearly reference the specific investigation to which it relates.
If the Office of Enforcement ultimately recommends the commencement of an enforcement proceeding, the written statement will be included with that recommendation.
Persons involved in an investigation who wish to submit a written statement on their own initiative at any point during an investigation would follow the relevant procedures described above.
Law Library Image
Consumer Financial Protection Bureau
Early Warning Notice
Bulletin 2011-04
November 7, 2011
Sample Early Warning Notice
Bulletin 2011-04
November 7, 2011