The CFPB faces major management challenges that could hamper itsability to accomplish its strategic objectives if they are notproperly addressed, according to the Federal Reserve's Office ofthe Inspector General.

The OIG said the CFPB must improve the operational efficiency of itssupervision program.

“While we recognize the considerable efforts associated with theinitial development and implementation of the program, we believethat the CFPB can improve the efficiency and effectiveness of itssupervisory activities,” the Sept. 30 report said.

In particular, the OIG found that as of July 31, the agency hadnot met its goals for the timely issuance of examination reports,and said a considerable number of draft examination reports had notbeen issued. The report said the CFPB had taken a number of stepsto address the problem, including the hiring of a third-partyvendor to identify possible efficiency opportunities in theexamination report review process.

The CFPB also faces roadblocks in building and retaininghigh-performing personnel, the Fed said.

“As the agency seeks to build and sustain a high-performingworkforce, it will need to strengthen workforce planning, establishappropriate training and development programs, implement aneffective performance management system, and put in place acomprehensive diversity and inclusion program,” the reportsaid.

According to the OIG, maintaining a diverse workforce is also achallenge at the CFPB. The bureau said it is planning to helpmanagers develop diversity and inclusion strategies in the hopes ofsustaining the agency's workface.

The report also said the CFPB's multiyear $215.8 millionrenovation of its headquarters poses several challenges, including managing riskslike unanticipated expenses and higher costs.

“Once the renovation is complete, not all headquarters personnelwill fit into the renovated building and additional space willstill be required,” the report said. “To address this issue, theCFPB is planning to consolidate personnel currently located in theother two buildings into one permanent space. Any delays in therenovation schedule could affect the CFPB's planning for both theswing space and the permanent space.”

The OIG also said the CFPB must guarantee an effectiveinformation security program. The CFPB currently collects,processes, stores, and shares private information on consumerfinancial products and services.

“Protecting personally identifiable information in federalsystems is critical because its loss or unauthorized disclosure canlead to serious consequences for individuals,” the report said.“The CFPB must continue to ensure that sensitive privacyinformation is adequately protected within the systems it owns andmaintains and within those maintained on its behalf by contractorsand other entities.”

The CFPB has said it does not examine consumers' accounts ormonitor the financial activities of any individuals.

“In the normal course of carrying out its statutory mandate toprotect consumers, ensure regulatory compliance, and monitor theconsumer financial marketplace for risks to consumers, the CFPBreceives information about accounts from consumers who seek theCFPB's help through the consumer response function and from theinstitutions involved in the complaints,” the report said.