1. CFPB Examination and Enforcement Update Christopher J. Willis Consumer Financial Services Group Ballard Spahr LLP 678-420-9436 willisc@ballardspahr.com

2. Outline The CFPB’s recent examination and enforcement activity The Bureau’s “Responsible Conduct” Bulletin and what it means Hot topics: Collections Fair lending and new “baseline” procedures Student lending-specific issues

3. Recent Exam and Enforcement Activity Bank examinations continue, as in 2012 Targeted examinations in particular operational areas Non-bank examinations, especially in debt collection Recent enforcement actions and consent orders: Auto finance Loan originator compensation Captive reinsurance of PMI Debt settlement and foreclosure rescue scams Ongoing investigations related to student loans

4. “Responsible Conduct” The CFPB released a Bulletin on June 25, 2013, describing “responsible conduct” that it would consider in terms of giving entities “extra credit” with respect to enforcement investigations and outcomes Four “pillars”: self-policing, self-reporting, remediation and cooperation The difficult issue of self-reporting Practical difficulties in “cooperation” No formula or certainty in terms of how factors will be weighed

5. Hot Topics: Collections The CFPB has made collections-related issues a very high priority Two recent Bulletins on unfair and deceptive practices relating to collections We see a great deal of focus on collections issues in examinations and enforcement investigations: Call timing, frequency and content Incentive compensation Convenience fees Do-not-calls and cease & desists Reference calls

6. Hot Topics: Fair Lending The Bureau’s reports on student lending highlight school-specific variables as areas of fair lending concern in student lending Recent release of “Baseline ECOA Review Procedures” Heavy emphasis on fair lending compliance management systems – self-assessment of existing operations and assessment of any business changes (new products, etc.). Disparate impact and discretion continue to be focus areas No specific guidance with respect to student lending

7. Hot Topics: Student Lending-Specific Availability of deferment/forbearance options on private student loans that mirror those applicable for Title IV loans Credit reporting (and responding to credit reporting disputes) Underwriting standards Electronic Funds Transfers (recurring EFT payments)

8. Preparing for CFPB Scrutiny Document compliance policies and procedures Pay attention to complaints and other UDAAP “leading indicators” Conduct compliance assessments from a consumer fairness perspective Pay special attention to fair lending, credit reporting, collections and payments issues Assess whether key records are easily retrievable in response to potential regulatory requests Examine vendor oversight issues (especially with respect to collections)