Overview
A Donald Trump effect was apparent with the January 26th Federal Register-- it was one of the shortest Federal Register volumes seen in some time—even the pre-holiday Registers sport more pages. The CFPB published a rule requiring incentive programs for sales of consumer products be subject to extraordinary controls adapted to such sales campaigns. These would be in addition to and perhaps duplicative of the requirements of primary federal regulators.
Incentive Sales Programs
On January 18, 2017, the CFPB published a compliance bulletin regarding incentive programs and how to prevent consumer harm. This Bulletin compiles guidance the CFPB has already given in other contexts and highlights examples from the CFPB's supervisory and enforcement experience in which incentives contributed to substantial consumer harm. It also describes compliance management steps that supervised entities should take to mitigate risks posed by incentives. Such programs may create incentives for employees or service providers to pursue overly aggressive marketing, sales, servicing, or collections tactics. The CFPB expects supervised entities that choose to utilize incentives to institute effective controls for the risks these programs may pose to consumers, including oversight of both employees and service providers involved in these programs. The Bureau's supervisory experience has found that an effective supervisory program commonly has the following components:
Board of directors and management oversight;
Compliance program, which includes:
Policies and procedures;
Training;
Monitoring and corrective action;
Consumer complaint management program; and
Independent compliance audit.
This Compliance Bulletin is a non-binding general statement of
policy articulating considerations relevant to the Bureau's
exercise of its supervisory and enforcement authority. See
the Consumer Bulletin at:
https://www.gpo.gov/fdsys/pkg/FR-2017-01-18/html/2017-01021.htm
Sudan Sanctions
On January 17, 2017, OFAC published its final rule lifting all
the sanctions that apply to Sudan and unblocking any property of
the Government of Sudan. OFAC is issuing this general license
in connection with ongoing U.S.-Sudan bilateral engagement and in
response to positive developments in the country over the past six
months related to bilateral cooperation, the ending of internal
hostilities, regional cooperation, and improvements with other
provisions of 31 CFR chapter V including those parts related to
terrorism, the proliferation of weapons of mass destruction, or
narcotics trafficking, or other applicable provisions of law,
including any requirements of agencies other than OFAC. See
the final rule at:
https://www.gpo.gov/fdsys/pkg/FR-2017-01-17/html/2017-00844.htm
Recordkeeping at Commodities Firms
On January 19, 2017, the CFPB published a proposed rule to amend the recordkeeping requirements. The proposed amendments would permit record keepers use advances in information technology as a means to reduce costs associated with the retention and production of paper and electronic records and to decrease the risks of cyber security threats, while maintaining necessary safeguards to ensure the integrity, availability, and accessibility of records required to be kept. Most information is produced and stored electronically on complex systems tailored to the needs of a given record keeper. These advances in information technology may have rendered certain technical elements of the CFTC's rules obsolete or outdated.
See the proposed rule at:
https://www.gpo.gov/fdsys/pkg/FR-2017-01-19/html/2017-01148.htm
Holding Company Liquidity Loss Absorbing Capacity and Debt Levels
On January 24, 2017, the Fed published its final rule regarding
holding companies of GSIBs to maintain outstanding a minimum amount
of loss-absorbing instruments, including a minimum amount of
unsecured long-term debt. In addition, the final rule prescribes
certain additional buffers, the breach of which would result in
limitations on the capital distributions and discretionary bonus
payments of a covered BHC. The final rule applies similar
requirements to the top-tier U.S. intermediate holding company of a
global systemically important foreign banking organization with $50
billion or more in U.S. non-branch assets. In October 2015,
the Board invited public comment on a notice of proposed rulemaking
(proposal) to require the largest domestic and foreign banks
operating in the United States to maintain a minimum amount of
total loss-absorbing capacity (TLAC), consisting of a minimum
amount of long-term debt (LTD) and tier 1 capital. The TLAC
and LTD requirements in the proposal had two overall objectives:
Improving the resiliency of these companies and improving their
resolvability in the event of their failure or material financial
distress. See the final rule at:
https://www.gpo.gov/fdsys/pkg/FR-2017-01-24/html/2017-00431.htm
Proposed: http://www.gpo.gov/fdsys/pkg/FR-2015-11-30/html/2015-29740.htm
Swap Data Access Rules
On January 25, 2017, the CFTC published its proposed rule
regarding amendments to the Commission's regulations relating
to access to swap data held by Swap Data Repositories. The proposed
amendments would implement pertinent provisions of the certain
legislation and make associated changes to the Commission's
regulations governing the grant of access to swap data to certain
foreign and domestic authorities. One of the sticking points
was foreign privacy law limiting the ability of foreign regulators
to indemnify Swap Data Repositories. Because the indemnity
requirement was removed, the proposed rule could be adopted. it is
critical for regulators to be able to share information, subject to
appropriate confidentiality and other protections. The rule will
make it easier for other regulators, both domestic and foreign, to
gain access to swap data repository (SDR) swap data. See the
proposal at:
https://www.gpo.gov/fdsys/pkg/FR-2017-01-25/html/2017-01287.htm
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
