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Financial Services Law Insights and Observations

CFPB says exam manual and general supervisory findings are nonbinding

Federal Issues CFPB Consumer Finance Examination Supervision

Federal Issues

On January 9, the CFPB released a blog post, What new supervised institutions need to know about working with the CFPB, discussing what institutions can expect from a supervisory relationship with the Bureau. Among other things, the Bureau noted that it relies on a “prioritization” process that includes analyzing risk to consumers to determine which consumer financial markets and which entities to include in its supervisory work. Specifically, the Bureau noted that when conducting an examination, CFPB examiners generally, among other things: (i) collect and review available information from within the CFPB, other agencies, and public sources, consistent with statutory requirements; (ii) review documents and information obtained through information requests sent to supervised entities; and (iii) conduct portions of exams to observe, conduct interviews, review additional documents and information, transaction test, and assess compliance management.

The Bureau emphasized that examiners use the Supervision and Examination Manual as a resource when conducting exams and other supervisory activities. While supervised institutions are bound by statutes and regulations, and not by the manual, the CFPB makes its manual publicly available. The Bureau highlighted the disclaimer attached to the manual, which notes that it “should not be relied on as a legal reference.” The Bureau also stressed that legal discussions in the exam manual are not binding on examiners or other CFPB staff, and noted that at the end of an exam or other supervisory activities, examiners provide the supervised institution with their findings, which may include “matters requiring attention” (MRA). Examiners use MRAs to communicate specific goals to address violations of law, risk of such violations, or compliance management deficiencies.