December 06, 2019

Warren, Brown Seek Answers from CFPB on "Advisory Opinions" That Could Weaken Consumer Protection Laws

Bureau Proposal Could Handcuff Consumer Protection and Allow Companies to Avoid Liability for Harming Consumers

Text of Letter (PDF)

Washington, D.C. - United States Senators Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking Committee Subcommittee on Financial Institutions and Consumer Protection, and Sherrod Brown (D-Ohio), Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs, sent a letter to Consumer Financial Protection Bureau (CFPB) Director Kathleen Kraninger seeking information regarding the Bureau's plans to develop a program to issue formal advisory opinions. In their letter, the senators expressed concern that issuing advisory opinions tailored to companies' specific circumstances could harm consumers, especially if companies could use these opinions to circumvent consumer protection laws.

Last month, CFPB Deputy Director Brian Johnson indicated that the Bureau was considering creating a formal advisory opinion process. Such a program would allow companies that offer consumer financial products to request an opinion from the agency about the legality of a potential product or practice before offering it to consumers, shielding the companies from liability. These opinions, developed at the request of regulated companies before the Bureau, could prevent the Bureau from taking enforcement actions if the financial products or practices ultimately harm consumers. This proposal follows the CFPB's September 2019 announcement of its "Compliance Assistance Sandbox" (CAS) and "No-Action Letter (NAL)" policies, which could also be used to exempt financial technology companies from consumer protection law requirements.

"The process for requesting or providing guidance should also be transparent, not an opaque process that would conceal companies' efforts to push for interpretations of rules that could weaken critical consumer protections," the senators wrote in their letter. "In addition, an advisory opinion process should not give political appointees authority to overrule or unduly influence longstanding Bureau policies or practices or the determinations of Bureau career staff. Nor should advisory opinions contravene the will of Congress by providing companies' with prospective immunity from consumer protection or anti-discrimination laws."

To address their concerns, Senators Warren and Brown asked Director Kraninger to answer a series of questions on how the CFPB plans to implement the advisory opinion program, and how these opinions could potentially interact with the Bureau's regulatory and enforcement agenda. They requested a response to their letter by December 19, 2019.

In August 2019, Senator Warren and Representatives Raja Kristhnamoorthi (D-Ill.), the Chairman of the House Oversight Subcommittee on Economic and Consumer Policy, Ayanna Pressley (D-Mass.), and Katie Porter (D-Calif.), members of the House Committee on Financial Services, wrote to CFPB Director Kraninger requesting information regarding the CFPB's CAS and NAL policies, which give the Bureau broad authority to waive consumer protection and anti-discrimination laws for certain companies.