CFPB gives go-ahead to firms seeking advisory opinions

WASHINGTON — The Consumer Financial Protection Bureau finalized a policy on Monday that enables financial firms to seek formal advisory opinions from the agency in order to gain more clarity about a specific regulatory policy.

“Regulatory certainty promotes compliance if the law applies and avoids unnecessary compliance costs if the law does not,” the bureau said.

The CFPB’s advisory opinion policy states that any person or entity can submit requests for advisory opinions to the agency. Agency staff will review requests and determine when it is appropriate to issue a formal advisory opinion. Once advisory opinions are issued, they will be made public through the Federal Register.

When determining which requests to pursue, the CFPB said it will prioritize “open questions” within its purview that can legally be addressed through an interpretive rule. The agency said it will issue an advisory opinion if it views the opinion as an “appropriate tool” for answering firms’ questions.

In the final policy, the CFPB signaled that it will not issue advisory opinions on interpretive issues that are subject to ongoing investigations, enforcement actions or planned rulemaking.

The formal advisory opinion policy follows years in which the agency has provided informal, nonbinding staff opinions when a firm needs clarification about a specific practice or product. The CFPB has stopped short of written advisory opinions that offer an interpretation of the law and can be extended to other firms in similar situations.

The financial industry has largely supported the implementation of a formal advisory opinion policy as a means for bringing regulatory clarity, while consumer advocates have warned that a formal advisory opinion policy would roll back regulations by reinterpreting existing laws and enable firms to shirk consumer protection responsibilities.

Along with the issuance of its final advisory opinion policy, the agency issued two advisory opinions.

The agency issued an advisory regarding the scope to which earned wage access products can be considered extensions of credit, as well an advisory opinion that certain education loan products are subject to disclosure requirements under the Truth in Lending Act.