CFPB's Enhanced Supervisory Appeals Process: A Potentially Beneficial Shift For Financial Institutions

On February 16, the CFPB issued revised rules updating its internal supervisory appeals process for institutions seeking to appeal a compliance rating or an adverse material finding. The updated rules open up new avenues for financial institutions to challenge supervisory evaluations and reflect a significant evolution from its 2015 updates.

Key Aspects of the Revised Rule:

• What may be appealed. In a significant departure from past practice, financial institutions are permitted to appeal any compliance rating, not just adverse ones (i.e., a rating of 3, 4, and 5). This is in addition to a company's appeal of the adverse supervisory finding.
• A change in the appeals committee. Under the Bureau's appeals process, a three-person appeals committee is formed for each appeal. Previously, such committees were comprised of one member of the staff of the Associate Director for Supervision, Enforcement, and Fair Lending, one representative from CFPB Supervision