The Consumer Financial Protection Bureau on Friday announced it had issued a final rule related to the procedures for when it chooses to use the administrative adjudication process — instead of going to federal courts — when bringing contested enforcement actions, making the process more closely track what would occur in federal court.
A copy of the final rule can be accessed by clicking here.
The CFPB has the authority to bring enforcement matters either via federal court or via administrative adjudication. Administrative adjudications are conducted before an administrative law judge, who issues recommendations to the director of the regulator — Rohit Chopra of the CFPB in this case. A benefit of administrative adjudication proceedings is that they “can allow an agency to harness its regulatory expertise,” the CFPB noted in announcing the release of the new rule. Similar to cases in District Court, administrative adjudication proceedings are subject to review by a United States Court of Appeals.
The CFPB said it still plans on using federal court for the “vast majority” of contested enforcement matters, but wanted to update the procedures for administrative adjudication to “make them as fair and effective for all parties as possible.”
Under the proposed changes, parties will now have the ability to conduct depositions of potential witnesses. This should allow hearings to “proceed more efficiently and focus more on issues central to the proceeding.” As well, proceedings will now be able to be divided into two or more stages, similar to what often occurs in federal court.
The CFPB announced the proposed rule back in February and sought comments, a step that it said it was not required to take. Ultimately, the CFPB said it chose to retain the updates as originally drafted.