BPI and Coalition of Trades Comment on CFPB Adjudication Proceeding Practices

To Whom It May Concern:

The undersigned organizations appreciate the opportunity to submit comments to the Consumer Financial Protection Bureau (“CFPB”) regarding its Rules of Practice for Adjudication Proceedings (the “Revised Rules”).[1] Collectively, we represent companies across the consumer financial services landscape. We share a common interest with the CFPB in the fair and consistent enforcement of federal consumer financial laws, including through administrative adjudication.

Administrative adjudication can play an important and valuable role in an effective regulatory system by providing an efficient—and equally fair—alternative to civil litigation. Indeed, properly structured, administrative adjudication can be a preferred forum for all participants—and particularly for routine matters that involve limited legal or factual disputes. But the design and implementation of any administrative adjudication process must afford a fair trial before a neutral decision- maker, providing both efficiency and a fair opportunity for a defendant company to present its defense. As seen recently with the Securities and Exchange Commission, for example, appropriate separation should be maintained between the enforcement and adjudication functions.[2] Likewise, efficiency must not compromise fairness. Rather, appropriate safeguards should be put in place to make sure that the right matters are brought in that forum and that rules promoting efficiency do not unfairly penalize companies. For example, ensuring that administrative law judges only hear actions that require the application of established law to the facts will play to the strengths of administrative adjudication. Likewise, maintaining access to federal district courts will help ensure due process protections are observed. Moreover, maintaining procedural safeguards equivalent to those in Article III courts will maintain the fairness of administrative proceedings.

To read the full comment letter, please click here.

[1] See CFPB, Rules of Practice for Adjudication Proceedings, 87 Fed. Reg. 10,028 (Feb. 22, 2022).

[2] See SEC, Commission Statement Relating to Certain Administrative Adjudication (April 5, 2022) (explaining finding that SEC enforcement staff improperly had access to adjudicatory memoranda).