The CFPB’s latest Supervisory Highlights report supervising the student loan servicing market has therefore been a priority for the Supervision program. The CFPB continues to examine entities servicing both federal and private student loans, primarily assessing whether entities have engaged in unfair, deceptive, or abusive acts or practices prohibited by the Dodd-Frank Act UDAAP.
The report includes important information for the debt collection industry on FDCPA compliance, credit reporting, student loan servicing and more. The Consumer Financial Protection Bureau has released its Winter 2016 Supervisory Highlights Report, which draws attention to alleged illegal practices in various sectors of the financial services industry, including debt collection, student loan servicing, remittances, mortgage origination, fair lending and consumer reporting. The findings included in the report were based on information obtained from the CFPB’s supervisory activities from September-December 2015. According to the report, the CFPB’s most recent public supervisory actions resulted in more than in $57 million in remediation to consumers and $8.5 million in civil monetary penalties. The report also states that in addition to public enforcement actions, the CFPB also recently resolved violations using non-public supervisory actions which resulted in restitution of approximately $14.3 million to consumers.
The Supervisory Report also detailed the CFPB’s recent efforts related to student loan servicing, including its recent collaboration with the Ed and the U.S. Treasury Department in releasing Joint Principles in Student Loan Servicing which, for example, provides guidance on payment allocation policies and other policies that the regulators favor.
The CFPB also noted significant issues within student loan servicing relating to servicers’ auto-default clauses in student loan agreements, conversion errors that increased borrowers’ costs, as well as consumer reporting issues. Regarding consumer reporting in particular, the CFPB found student loan servicers lacked policies and procedures regarding the accuracy and integrity of information, and also found policies and procedures that were insufficient. For example, examiners found:
- Policies and procedures that do not reference one another so that it is difficult to determine which policy or procedure applies;
- Policies and procedures that do not contemplate record retention, internal controls, audits, testing, third party vendor oversight, or the technology used to furnish information to CRAs; and
- Policies and procedures that lack sufficient detail on employee training.
This section of the report underscores the CFPB’s continued focus on accuracy and integrity in consumer reporting and is another important reminder that all furnishers need written policies and procedures on accuracy and integrity as required under Regulation V.