To Encourage Innovative Consumer Disclosures, CFPB Revamps Unavailing Policy

Five years after the Consumer Financial Protection Bureau finalized a policy for trial consumer disclosures that saw exactly zero such disclosures authorized, the bureau is retooling its policy to encourage more companies to develop trial disclosures.

In a Federal Register filing set to be published Monday, the bureau proposed a new policy that would streamline the application period, set a 60-day deadline to grant or deny an application, specify that a two-year testing period would be the norm (with extensions to be based on evidence of effectiveness) and clarify that the CFPB’s trial disclosure program will coordinate with state regulatory “sandboxes.”

“The Bureau believes significant opportunities exist to enhance consumer protection by facilitating innovation in financial products and services and enabling companies to research informative, cost-effective disclosures,” the agency said. “The Bureau also recognizes that in-market testing, involving companies and consumers in real world situations, may offer particularly valuable information for improving disclosure rules and model forms.”

The proposed policy addresses several concerns the American Bankers Association raised about the original program in 2013. It allows groups of institutions or associations to submit applications on behalf of members, unlike the bureau’s earlier policy. It also provides longer standard testing periods and allows testers to continue using effective disclosures while the CFPB amends its rules to incorporate successfully tested disclosures. The CFPB also said it would engage in preliminary conversations with interested institutions. Comments on the proposed policy are due by Oct. 8.