A Perspective on CFPB Exams and Customer Experience “Begin with the end in mind” ~Stephen Covey “Great service comes from the heart” ~Barbara Glanz

Agenda CFPB Goals/Outcomes Exam Modules Emphasis on Fair Lending Process Complaints Lessons Learned

CFPB Goals/Outcomes The CFPB’s goals are to:  Prevent financial harm to consumers while promoting good practices that benefit them  Empower consumers to live better financial lives  Inform the public, policy makers and the CFPB’s own policy-making with data driven analysis of consumer finance markets and consumer behavior  Advance the CFPB’s performance by maximizing resources and enhancing input The CFPB’s desired outcomes (in support of its goal of preventing financial harm to consumers and promoting beneficial practices)  Adoption of regulations  Supervise institutions to foster compliance with federal consumer financial laws  Enforce such laws  Hold violators “accountable” Instead of establishing industry-wide standards through the rulemaking process, the CFPB plans to use it supervisory and enforcement authority to impose such standards

Exam Modules Fair Lending Advertising Marketing Qualification and Originations Servicing Collections Complaints

Emphasis on Fair Lending Extraordinarily heavy emphasis on Fair Lending  Advertising and Marketing module looks at Equal Credit Opportunity and Regulation B  Qualification and Originations module looks at all credit scoring and automated underwriting for fair lending compliance  Close scrutiny of:  Lenders and service providers  Underwriting and documentation practices  Repayment options and payment posting  Fees  Disclosures  Reporting  Adequacy of statements Heavy disparate impact testing Track cases separately

Process Extensive questionnaires Introductory “Set the Stage” meeting Central point of contact Careful review of answers (Legal/Compliance) Central repository for data  Security  Indexing  Controls Auditors  Frequently change  Prefer to work remotely, if possible  Own their piece, perspective, pace and process  Limited sharing  Expect customized reporting (variations of the same request) Timeframes

Complaints The Complaints Module reviews the process for receiving, tracking and responding to customer complaints. The definition of a complaint varies but in general appears to include regular servicing requests. Policies and procedures are interchangeable. Line of business and corporate standards are expected to be identical. Examiners have expectations that 100% of all calls are recorded and kept indefinitely. This includes Executive Office calls back to customers. Standards for oral and written complaints are expected to be indistinguishable. Heavy focus on reporting and significant feedback is offered for the reporting content and distribution. Review how does a “normal” customer get to an executive or escalate.

Lessons Learned 1.The CFPB exam is:  A whole new ball game  A significant time and resource investment  All about the customer- and personal perceptions of customer impacts  Data, data, data  Much more complex and different than any exam or audit  New to them (and banks are complex entities)  Enforcement oriented with limits to rebuttals 2.Documentation is key 3.Logistics are important 4.Scope is not always “as advertised”

Lessons Learned… 5.“Surprises” are commonplace – may have to “agree to disagree” 6.The exam will last longer than they anticipate and perhaps you ever dreamed