Consumer Financial Protection Bureau Issues Final Rule on the Role of Supervisory Guidance

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WASHINGTON, D.C. — The Consumer Financial Protection Bureau this week issued a final rule regarding the Bureau’s use of supervisory guidance for its supervised institutions. The rule codifies the statement, with amendments, that the Bureau and other federal financial regulatory agencies issued in September 2018, which clarified the differences between regulations and supervisory guidance.

Unlike a law or regulation, supervisory guidance does not have the force and effect of law and the Bureau does not take enforcement actions or issue supervisory criticisms based on non-compliance with supervisory guidance. Rather, supervisory guidance outlines supervisory expectations and priorities, or articulates views regarding appropriate practices for a given subject area.

In contrast to supervisory guidance, regulations do have the force and effect of law and enforcement actions can be taken if regulated institutions are in violation. Regulations are also generally required to go through the notice and comment process.

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The Bureau collaborated closely with other federal financial regulatory agencies in this rulemaking, including by issuing a joint proposal for public comment.

The final rule can be found here: https://files.consumerfinance.gov/f/documents/cfpb_role-of-supervisory-guidance_final-rule_2021-01.pdf.

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