CFPB Starts Examinations of Key Service Providers
05/01/17—The Consumer Financial Protection Bureau’s (CFPB) Assistant Director of Supervision Policy announced that the CFPB would begin to regularly supervise service providers.
Last month, during the spring meeting of the American Bar Association’s Consumer Financial Services Committee in New Orleans, Peggy Twohig, Assistant Director of Supervision Policy, spoke on a panel describing how the CFPB conducts its examinations of supervised entities.
After Twohig gave her prepared remarks, she was asked how the CFPB treats service providers. Twohig stated that the CFPB expects companies to exercise oversight over their service providers to ensure they do not cause consumer harm. But for larger, more significant service providers, the CFPB will start to examine the service provider directly and on a regular basis.
While the CFPB has always had the authority to supervise and examine service providers directly, it has not stated that it would routinely supervise service providers, until now. According to Twohig, the CFPB would focus on service providers in the mortgage industry first.
The CFPB has confirmed Twohig’s announcement in its recently released Supervisory Highlights report.
“Because a single service provider might affect consumer risk at many institutions,” the report said, “the CFPB has begun to develop and implement a program to supervise these service providers directly. Direct examination of key service providers will provide the CFPB the opportunity to monitor and potentially reduce risk to consumers at their source.”
According to the report, the CFPB will initially conduct baseline reviews of some service providers to learn more about these companies. The CFPB will start by “focusing on service providers that directly affect mortgage origination and servicing markets.”