Today, those practices are governed by the sweeping Dodd-Frank Wall Street Reform Act (Dodd-Frank), which established the Consumer Financial Protection Bureau (CFPB).
|Mr. Hoffman discusses the sweeping|
implications of Dodd-Frank legislation
with Sen. Chris Dodd in Washington
And it is that very CFPB which has set out to define and determine, what constitutes responsible business conduct--at least with respect to the behavior it is authorized to enforce. Thus, in late June 2013, the CFPB issued the following guidance for all to behold and abide by:
Self-policing:This concept, which can also be described as self-monitoring or self-auditing, reflects a proactive commitment by a party to use resources for the prevention and early detection of potential violations of consumer financial laws.
Self-reporting:While no substitute for effective self-policing, self-reporting substantially advances the Bureau’s protection of consumers and enhances its enforcement mission by reducing the resources it must expend to identify potential or actual violations that are significant enough to warrant an enforcement investigation and making those resources available for other significant matters. Prompt self-reporting of serious violations also represents concrete evidence of a party’s commitment to responsibly address the conduct at issue.
When violations of federal consumer financial laws have occurred, the Bureau’s remedial priorities include obtaining full redress for those injured by the violations, ensuring that the party who violated the law implements measures designed to prevent the violations from recurring, and, when appropriate, effectuating changes in the party’s future conduct for the protection and/or benefit of consumers. Remediation may be viewed positively even when the party believes that it may have identified a potential rather than an actual violation.
Unlike self-policing and remediation, which may occur with or without Bureau involvement, cooperation relates to the quality of a party’s interactions with the Bureau after the Bureau becomes aware of a potential violation of federal consumer financial laws, either through a party’s self-reporting or the Bureau’s own discovery efforts. In order to receive credit for cooperation in this context, a party must take substantial and material steps above and beyond what the law requires in its interactions with the Bureau. Simply meeting those obligations will not be rewarded by any special consideration.
Following these steps will help the CFPB determine the level of responsibility a company has adopted, and accordingly can help the agency mitigate practices harmful to consumers.