CFPB issues No-Action Letter, Trial Disclosure, Sandbox policies

September 10, 2019

The Consumer Financial Protection Bureau (CFPB) Tuesday issued three new policies to promote innovation and facilitate compliance: the No-Action Letter (NAL) Policy, Trial Disclosure Program (TDP) Policy, and Compliance Assistance Sandbox (CAS) Policy. 

The CFPB proposed the policies in 2018, and while CUNA is supportive of the CFPB’s effort to facilitate innovation in financial services, it requested the CFPB ensure any deviation from traditional regulatory requirements are narrow and do not create an uneven playing field.

NALs are designed to provide increased regulatory certainty through a statement that the CFPB will not bring a supervisory or enforcement action against a company for providing a product or service under certain facts and circumstances. 

The new NAL Policy improves on the CFPB’s 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.

Under the new TDP Policy, entities seeking to improve consumer disclosures may conduct in-market testing of alternative disclosures for a limited time upon permission by the CFPB. The new policy streamlines the application and review process. 

The CAS Policy enables testing of a financial product or service where there is regulatory uncertainty. After the CFPB 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. 

Approvals under the CAS Policy will provide protection from liability under the Truth in Lending Act, the Electronic Fund Transfer Act, or the Equal Credit Opportunity Act.