Hatch, Lankford introduce legislation to improve guidance issued by the CFPB

US Senators Orrin Hatch (R-UT) and James Lankford (R-OK) introduced the Give Useful Information to Define Effective Compliance Act (GUIDE Compliance Act). The GUIDE Compliance Act (S. 3443) would enhance transparency and predictability to the rulemaking process of the Consumer Financial Protection Bureau (CFPB).

“The CFPB has immense responsibility in protecting consumers. With this responsibility comes the need for effective transparency and genuine accountability,” Hatch said. “This bill helps consumers and businesses better understand the agency’s rules, and it also reduces the risk of misinterpretation of guidance. The GUIDE Compliance Act brings greater clarity and certainty to the CFPB’s rulemaking process so that American households and businesses can consume, save, and invest with confidence.”

“The federal rulemaking process should be transparent and accountable to every American, and the BCFP should provide necessary or appropriate guidance related to the rules they implement,” said Lankford. “The GUIDE Compliance Act will provide consumers and providers a strong grasp of the rules issued by the BCFP, including a well-defined understanding of how those rules will directly affect them. This is a good, commonsense bill that willprovide clarity for consumers and help prevent ‘gotcha’ enforcement. I look forward to the bill working its way through the legislative process to become law.”

Statements of Support

Steven G. Day NTP, President, American Land Title Association

“We applaud Sens. Orrin Hatch and James Lankford for introducing the Give Useful Information to Define Effective Compliance Act. This legislation would create a more formal process at the Consumer Financial Protection Bureau for issuing useful guidance to complement the consumer financial laws it enforces. Having the CFPB provide more clarity to regulations, such as the Real Estate Settlement Procedures Act (RESPA), allows ALTA members to better serve consumers and deliver peace of mind to homebuyers every day. Regulations create the rules of the road for consumers and business, and when everyone understands the guidelines, markets operate more efficiently. Regulations should support business activity in ways that maximize benefits for consumers, and we believe this bill helps achieve this.”

Bill Killmer, Senior Vice President of Legislative and Political Affairs, Mortgage Bankers Association:

“The Mortgage Bankers Association strongly supports the Give Useful Information to Define Effective Compliance Act or “GUIDE” Compliance Act, introduced by Senators Orrin Hatch and James Lankford. This important legislation would provide a statutory framework requiring the Bureau of Consumer Financial Protection (“BCFP”) to issue regular, written interpretative rules and guidance to facilitate industry compliance – and thereby better protect consumers. By creating a more transparent regulatory environment, we believe this legislation, along with its bipartisan House companion, H.R. 5534 , will serve to enhance the effectiveness and efficiency of the BCFP.”

Background

The GUIDE Compliance Act: 

  • Requires the Director of the CFPB to issue guidance, including written interpretative rules, bulletins, statements of policy, and frequently asked questions to help facilitate compliance;
  • Mandates that the CFPB publish in the Federal Register the definitions, criteria, timelines and process for issuing each type of guidance the Bureau shall provide, within 30 months of the legislation’s enactment;
  • Protects businesses from liability for relying, in good faith, on guidance issued by the CFPB in effect at the time of such action;
  • Requires the CFPB to establish a process and timeframes for requests for guidance, including time limits to provide answers in response to requests for guidance, and a process for amending or revoking guidance;
  • Requires the CFPB to develop guidelines for determining the size of any civil money penalties and publish these guidelines in the Federal Register within 30 months of enactment;
  • Includes support from the Mortgage Bankers Association, American Land Title Association, National Association of Mortgage Brokers, National Association of Home Builders, National Association of Federally-Insured Credit Unions, Credit Union National Association, Community Home Lenders Association, Community Mortgage Lenders Association, ACA International, Consumer Mortgage Coalition, and Manufactured Housing Institute.

The House companion bill (H.R. 5534), introduced by Reps. Duffy (R-WI) and Perlmutter (D-CO), was passed by the House Financial Services Committee 38-14 on September 13, 2018.