Is Your Bank Ready to Return to BAU in the Post-Pandemic Regulatory World?

The Consumer Financial Protection Bureau (CFPB) recently announced that it’s back to business as usual.  

Is your bank ready?   

If you’ve been taking advantage of the CFPB’s relaxed compliance standards during the COVID-19 pandemic, you’ll want to pay special attention to the March 31 update rescinding those accommodations. To ensure banks could meet consumers’ needs as the coronavirus spread closed down businesses and put people out of work, the bureau eased reporting requirements and gave financial institutions more regulatory flexibility. 

A year later, in its latest announcement, the bureau is telling us that since many banks have been able to resume normal operations and even maintain remote capabilities, it expects those same financial institutions to be back in a position to re-engage in meeting regulatory standards. 

Key changes include: 

• Ending support for flexibility around loan modifications, appraisal and evaluation standards, credit reporting expectations, E-Sign requirements for credit card disclosures and credit card billing disputes. 
• Requiring banks to file their quarterly Home Mortgage Disclosure Act data beginning with their 2021 first-quarter data, due on or before May 31.   
• Requiring banks to resume submission of reporting information regarding credit cards and prepaid cards, as well as activity and financial statements by land developers subject to the Interstate Land Sales Full Disclosure Act.   

“We are now over a year into the disruptive and deadly COVID-19 crisis. The virus has affected industry as well as consumers, but individuals and families have been hardest hit by the pandemic’s health and economic impacts,” CFPB Acting Director Dave Uejio said in the statement. “Providing regulatory flexibility to companies should not come at the expense of consumers. Because many financial institutions have developed more robust remote capabilities and demonstrated improved operations, it is no longer prudent to maintain these flexibilities. The CFPB’s first priority, today and always, is protecting consumers from harm.” 

Take Smart Action Now 

Banks with strong change management practices and risk-aware cultures should be well positioned to adapt practices to meet compliance requirements. We recommend a few smart steps to get you started on that path: 

1. Review the bureau’s full announcement, which includes additional details.  
2. Together with your process owners, review your documentation and all processes impacted by this bureau action to identify where you modified your practices/procedures within the last year.   
3. Update your procedures to be fully compliant with CFPB expectations.   
4. Meet with all stakeholders to communicate the updated procedures and be sure to take note of any roadblocks they may see. (Ex: How will the changes above impact your downstream processes? Longer call handling times?)   
5. Monitor the areas impacted and augment staff as needed, since the bureau noted staffing inadequacies should not impede compliance.  

How Spinnaker can help 

With experience on the front line in managing risk and developing compliant processes, Spinnaker’s experts can provide the insights and skills to help you update your practices to meet the reinstated expectations of the CFPB and other regulatory agencies. Review the five key steps we recommend you take right now – and reach out to our team to help close any gaps.