CFPB Issues Final Rules (Part 2 of 4): State Official Notification

18 June 2012 Consumer Class Defense Counsel Blog

The Consumer Financial Protection Bureau (“the Bureau”) promulgated various final rules dealing with their enforcement powers on June 6, 2012. Among them was the final rule for state official notification. While short in comparison to the other rules issued, this rule provided some guidelines for state officials and attempted to create a process that will keep the Bureau informed of all consumer protection actions initiated by the states.

Section 1082 deals with State Official Notification Rules. The Bureau elaborated on the requirement that states notify it at least ten days before initiating any adjudicative proceeding before a court or an administrative or regulatory body. The rule now sets forth the specifics as to who at the Bureau should be notified, how they should be notified, and the specific contents required for inclusion in the written notification.

The state official must notify the Office of Enforcement and the Office of the Executive Secretary. This notice should be provided through electronic mail, with a copy provided on the same day to the relevant prudential regulator or the designee by mail or electronic mail. The Bureau notes that the rule “makes clear that the Bureau can intervene as a party in an action.” 

The rules also contain an emergency provision allowing an action to be filed without prior notice “in order to protect the public interest or prevent irreparable and imminent harm.” If an action is filed under this provision, the state official has 48 hours to notify the Bureau. The Bureau avoided specifically identifying what constitutes an emergency choosing to allow this to be shaped on a case-by-case basis.

The rule also addressed concerns that commentators had with privilege and confidentially. The Bureau specifically notes that this notification rule will not waive any applicable privilege belonging to the notifying state. 

With this final rule, the Bureau is staking its claim and definitively positioning itself over the states as the primary regulatory and administrative body for compliance with the consumer protection laws within the scope of its authority. This new rule keeps the Bureau in the loop in terms of all actions being initiated by state officials and also gives them the latitude to intervene if necessary.

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