Global Financial Market Watch : Global Financial Lawyer & Attorney : K&L Gates Law Firm : Government Enforcement, Investment Management

The 2012 Annual Outlook provides a valuable collection of articles that address important industry and regulatory trends and their correlation with government and political developments. This edition highlights regulatory issues in European Union countries, and also covers diverse topics such as: systemic financial risk regulation, anti-corruption and white-collar enforcement initiatives, tax policies, competition and antitrust law matters, intellectual property and international trade developments, energy and climate change, and health care and food safety laws.

Click here to read the report.
 

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K&L Gates is pleased to announce the launch of Consumer Financial Services Watch, a new blog focusing on legal and regulatory developments affecting consumer financial service providers, including news and developments relating to the Consumer Financial Protection Bureau (CFPB) and other topics.

Recent Blog Posts

We're blogging about a host of topics of interest to the consumer financial products and services industry, with the most recent posts covering:

• FHA Insured Mortgages Require an Appraisal by a State Certified Appraiser. Learn more.
• CFPB Now Accepting Mortgage Complaints from Consumers. Learn more.
• The CFPB’s Office of Servicemember Affairs Looks at the Lending Practices of For-Profit Colleges and Their Impact on Military Members. Learn more.
• FHA: HUD Uses FAQs to Communicate Policy Changes. Learn more.
• HUD’s Proposed Fair Lending Rule: Deadline for Comments. Learn more.
• CFPB and Other Federal Banking Agencies Issue Joint Supervisory Statement Clarifying $10 Billion Asset Determination: Regulatory Uncertainty Remains. Learn more.
   

For more information, please visit our Consumer Financial Services Watch blog.

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By: Charles R. Mills, Lawrence B. Patent, Gordon F. Peery

Culminating a process that took almost two years to complete, the Commodity Futures Trading Commission (“CFTC”), by a 3-2 vote on October 18, 2011, adopted regulations under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) imposing so-called “hard” position limits on a wide range of commodity interest contracts based upon underlying agricultural, metal and energy products. On December 2, 2011, the International Swaps and Derivatives Association and the Securities Industry and Financial Markets Association initiated a legal challenge to the CFTC's regulations by both filing a suit in the federal district court in the District of Columbia and filing a petition for review of the regulations in the U.S. Court of Appeals for the District of Columbia Circuit. They allege that the CFTC violated the Administrative Procedure Act by (1) concluding that Dodd-Frank required it to establish position limits without first determining whether they were necessary; (2) failing to present a reasoned analysis or consider all evidence before adopting the regulations; (3) failing to conduct an adequate cost-benefit analysis; and (4) conducting a flawed rulemaking process that prevented commenters from meaningfully participating. They will seek guidance from the courts regarding which court is the correct forum for their challenge.

The new regulations effectively cap the net speculative position (long or short) that a trader may hold -- even on an intraday basis -- of each of 28 specified futures contracts, options on those futures contracts, and economically equivalent swaps. The regulations refer to those 28 futures contracts as “Core Referenced Futures Contracts.” Such contracts and their economically equivalent options on futures and swaps will be referred to collectively as “Referenced Contracts.” Positions in Referenced Contracts that meet the CFTC’s definition of bona fide hedges are exempt from the limits, provided a trader files a notice with the CFTC to claim the exemption.

In addition to the new hard limits, the CFTC also adopted new “visibility levels” for specified metals and energy contracts. These levels do not trigger position limits, but reaching them will require traders to report information about their positions to the CFTC.

To view the complete alert online, click here.
 

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By: Stephanie C. Robinson

It is no secret that the CFPB is taking great interest in consumers’ complaints about credit cards. From day one, a “submit a credit card complaint” icon has held a prominent position on the agency’s home page, and CFPB representatives have talked about how credit card offers and terms are sometimes too complicated for consumers to understand.

In an effort to help consumers make better-informed decisions about credit cards, the CFPB plans to publish periodic reports about trends and patterns in complaint data. The first such report, issued on November 30, 2011, presents statistics on the complaints received between July 21, 2011 and October 21, 2011. The three most common types of grievances involve: (1) billing disputes (13.4% of complaints); (2) APR or interest rate (11.0% of complaints); and (3) identity theft / fraud / embezzlement (10.8% of complaints).

Of course, these categories may not even be especially meaningful – the consumer selects the complaint type when submitting a complaint and the CFPB found that consumers do not have a consistent understanding of the category options. (Practice tip: Even though consumers are not checking the boxes correctly, card issuers may want to organize the complaints they receive into the same types of categories the CFPB is using.)

Not surprisingly, the report notes that in a large number of cases, the issuer and the consumer present conflicting factual accounts, but despite this, the issuers have been willing to resolve the complaints.

In addition to publishing periodic reports, the agency plans to make the “non-narrative” portions of consumer complaints accessible to the public in fully searchable and downloadable format. Those non-narrative data fields include date, issuer, zip code, and type of complaint (but not personal identifiers like consumer name and address). For now, the full text of the consumer’s complaint will not be included because those narratives may contain personally identifiable information. CFPB is asking for comment, however, on whether there are practical ways to disclose the narrative data without undermining privacy interests, such as through use of a consumer opt-in.

The rationale for disclosing the non-narrative data fields is that it will allow outside parties to identify trends and patterns that they believe may help inform consumer decisions about credit cards. In addition, though, it is reasonably foreseeable that any agency with standing and authority to do so may use the publicly available information as the basis for initiating investigations of issuers.

Comments on the CFPB’s proposed policy statement on the disclosure of credit card complaint data are due on January 30, 2012.
 

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By: Kathryn M. Baugher

On November 7, the Consumer Financial Protection Bureau unveiled a process designed to warn individuals and companies of possible enforcement actions against them. At its discretion, the Bureau may provide an Early Warning Notice and an opportunity to respond before deciding whether to pursue an enforcement action. This process is not required by law, however, and the CFPB may decide not to provide notice in certain cases, such as when the Bureau’s Office of Enforcement believes that prompt action is necessary.

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By: David L. Beam, Rebecca Lobenherz, Stephanie C. Robinson

Those who have been concerned about the expansive powers of the new Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) should ready themselves for the risk assessment reviews that the Bureau is about to initiate. The CFPB recently released the first edition of its Supervision and Examination Manual (“Examination Manual”), which provides an overview of the Bureau’s supervision planning process and details the Bureau’s examination procedures. A key component of the Examination Manual is the CFPB’s Consumer Risk Assessment process, which evaluates supervised entities based on the amount of risk their activities pose to consumers, identifies sources of risk, and assesses the quality of risk controls put in place by the supervised entities.

To view the complete alert online, click here.
 

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By: Jonathan D. Jaffe, Steven M. Kaplan, David I. Monteiro, David A. Tallman

The Bureau of Consumer Financial Protection (the "Bureau" or the "CFPB") was designed to provide a single, integrated federal approach to consumer financial protection. But with the October 13, 2011, release of its new Mortgage Servicing Examination Procedures (the "Procedures"), the CFPB appears to leave it up to scores of individual examiners to decide in their subjective judgment whether a company's loan servicing practices raise "unfair, deceptive, or abusive acts or practices" ("UDAAP") concerns. A federal government that is supposed to sing in one voice has not yet harmonized its employees.

To view the complete alert online, click here.
 

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By: Kathryn Baugher

The CFPB is expanding its “Know Before You Owe” initiative to cover student loans. Since “Know Before You Owe” began last May, the CFPB has asked the public for input on a variety of draft mortgage disclosure forms. Now the CFPB is working with the Department of Education to gather feedback on a sample financial aid offer form. The Department of Education, as required by the Higher Education Opportunity Act, plans to publish a model form that schools can use to communicate financial aid offers to students.

On September 13, the Department of Education held a public meeting for interested parties to discuss how to improve financial aid offer forms. Then, on October 26, the CFPB published a sample form, referred to as a “Financial Aid Shopping Sheet,” on its web site. The CFPB calls the shopping sheet a “thought starter,” not an official proposal.

The CFPB web site asks the public to submit comments on what they like and dislike about the form. It also asks the public to rank certain types of information in terms of usefulness for evaluating a financial aid offer (e.g., estimated debt at graduation, whether students at the school have been able to repay their loans). You can view the sample form and provide input
here.

The model form is only one piece of the CFPB’s work with regard to student loans. In the coming weeks, the CFPB plans to release a Notice and Request for Information asking the public, including the student loan industry, to provide information about the private student loan market. The CFPB will use this information to prioritize its consumer education and policy efforts. The CFPB and the Department of Education will also take the information into account when preparing a report to Congress on private student loans, which they are required to complete by July 2012.
 

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By: Rebecca Lobenherz

The CFPB, which has regularly reached out to consumers online through its blog posts and its consumer complaint portal, is also seeking consumer input the old-fashioned way - in person. On October 26, Raj Date, Special Advisor to the Secretary of the Treasury for the CFPB, who previously spoke with consumers in Philadelphia, will be headed to Minneapolis, Minnesota to discuss the Bureau’s upcoming initiatives directly with consumers. The Bureau has plans on holding more events aimed at consumers throughout the country in the upcoming months.

Unlike Mr. Date’s previous speaking engagement in Philadelphia, the Minneapolis town hall event is specifically billed as a forum where members of the community can share their experiences with the consumer credit industry, and specifically with respect to student loans, credit cards, and mortgage loans. The spotlight on these particular consumer financial products should come as no surprise if you have been following the Bureau’s online complaint process, which has been accepting credit card complaints from consumers since the summer and will be expanded to include complaints on mortgages and student loans.
 

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