CFPB finalizes no-action letter (NAL) policy, two others to ease entry of new products, test new disclosures

A revised no-action letter (NAL) policy, announcement of the first NAL issued under the new policy, and final policies on trial disclosures and compliance assistance (proposed initially as a “product sandbox” policy) were issued Tuesday by the federal consumer financial protection agency, which said the policies will “promote innovation and facilitate compliance.”

The three policies were proposed in September and December of last year. Each is applicable beginning today (Sept. 10), as follows:

No-action letter (NAL) policy: The bureau said NALs provide increased regulatory certainty through a statement that the bureau will not bring a supervisory or enforcement action against a company for providing a product or service under certain facts and circumstances. The new policy “improves upon” the 2016 NAL policy by having, among other things, a more streamlined review process focusing on the consumer benefits and risks of the product or service in question.

NAL issued for housing counseling agencies: Under the new policy, the bureau on Tuesday issued an NAL in response to a request by the Department of Housing and Urban Development (HUD) on behalf of more than 1,600 housing counseling agencies (HCAs) that participate in HUD’s housing counseling program. “The NAL, which is an exercise of the Bureau’s supervisory and enforcement discretion, is intended to facilitate HCAs entering into such agreements with lenders and will enhance the ability of housing counseling agencies to obtain funding from additional sources,” the bureau stated. Under the NAL, the bureau states it will not take supervisory or enforcement action under RESPA against HUD-certified HCAs that have entered into certain fee-for-service arrangements with lenders for pre-purchase housing counseling services.

Trial disclosure program (TDP) policy: Under this policy, entities seeking to improve consumer disclosures may conduct in-market testing of alternative disclosures for a limited time upon permission by the bureau. The bureau notes that the Dodd-Frank Act authorizes it to provide certain legal protections for entities to conduct trial disclosure programs, as outlined in the TDP policy. The new policy streamlines the application and review process, it stated.

Compliance assistance sandbox (CAS) policy: This policy enables testing of a financial product or service where there is regulatory uncertainty. The bureau said approvals under the policy will give protection from liability under the Truth in Lending Act (TILA), the Electronic Funds Transfer Act (EFTA), or the Equal Credit Opportunity Act (ECOA). “After the Bureau evaluates the product or service for compliance with relevant law, an approved applicant that complies in good faith with the terms of the approval will have a ‘safe harbor’ from liability for specified conduct during the testing period,” it stated.

CFPB release

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