The CFPB has been widely criticized for regulating by enforcement actions, rather than embarking on rulemaking proceedings, to delineate the regulatory rules of the road for the financial services industry. In a March 9,2016 speech, Director Richard Cordray endeavored to explain the method to the CFPB's enforcement madness. While understanding the director's perspective is helpful, that speech failed to connect all the dots for the compliance world.

So, what did Director Cordray say? The bureau's supervisory work is largely confidential between the company being examined and the CFPB. However, the CFPB publishes a quarterly report called “Supervisory Highlights” to bring transparency to the CFPB's oversight program. The CFPB expects the industry to take note of the major issues addressed in its examination work and to immediately respond to the remedial actions noted in those reports. As to enforcement actions, Director Cordray said, “It would be compliance malpractice for executives not to take careful bearings from the contents of these orders about how to comply with the law and treat consumers fairly.” He also suggested that the CFPB consent orders are meant to expose a pattern of actions for the industry to decipher.

Let's try applying these statements to the No. 1 consumer complaint category for the CFPB: Debt collection. In 2015, the CFPB had 15 consent orders related to debt collection practices. From those orders, it's easy to identify what the CFPB doesn't like, but it's not readily apparent what the right way to handle debt collection is – at least in the CFPB's eyes.