Consumer Financial Protection Bureau building in Washington, D.C. Photo by Diego M. Radzinschi
The CFPB has done a poor job of consistently ensuring that financial institutions that violate federal law correct those problems, the agency's Inspector General said, in a report released Wednesday.
As a result, the report states, the agency may have trouble measuring whether an institution that was told that it had a "Matter Requiring Attention" had resolved the problem.
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In addition, the IG said, the inconsistency likely resulted in the CFPB overstating its success in resolving those issues.
The IG said that it reviewed examinations conducted between January 2015 and March 2017.
During an examination, the CFPB flags violations of consumer laws or regulations, compliance program problems and control weaknesses.
CFPB officials told the IG that they were instituting a system that would ensure consistency in the MRA process.
There are several types of ways the agency cites the financial institution; the IG report focused on Matters Requiring Attention.
Specifically, the IG reported that:
- The percentage of MRAs that were resolved within a prescribed timeframe appeared to be overstated. The bureau reported in its May 2017 performance report that it had exceeded its goal of resolving MRA issues in 80% of those issued. For instance, in 2016, the agency said it had resolved 96% of the MRAs by the deadline set. Those figures are likely overstated the IG said.
- The bureau has failed to define the word "resolved," an omission that leads to inconsistent enforcement of laws and rules. "In our opinion, the use of the term resolved may create the impression that a supervised entity has taken all actions necessary to address an MRA in a timely and satisfactory manner, when in fact, the Bureau's calculation of the measurement includes MRAs that are in the process of being addressed by the institution or have yet to be verified as complete," the IG said.
- The agency did not have a process for keeping MRA documents and decisions, making it difficult for future examiners to assess the progress a financial institution may have made.
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