Pay Now or Pay Later, But Paying Later May Cost a Whole Lot More

The Consumer Financial Protection Bureau has long required that an institution within the scope of its supervision or enforcement authority, including both depository institutions like banks and non-depository consumer financial services companies like auto finance companies, develop and maintain a written, sound, and robust compliance management system, or CMS, that is integrated into the overall framework for a product's design, delivery, and administration across the institution's entire product and service lifecycle.

In the CFPB's view, a sound and robust CMS is how an institution, among other things, establishes its federal law compliance responsibilities and maintains legal compliance. Institutions are also expected to manage relationships with service providers to ensure that those providers effectively manage compliance with federal consumer financial laws applicable to the product or service being provided. The CFPB has routinely requested those that it supervises/examines and even those against which it has enforcement authority to provide it with a copy of the entity's CMS.

As a refresher, a CMS is how an institution: (1) establishes its compliance responsibilities; (2) communicates those responsibilities to employees; (3) ensures that responsibilities for meeting legal requirements and internal policies and procedures are incorporated into business processes; (4) reviews operations to ensure that responsibilities are carried out and legal requirements are met; and (5) takes corrective action and updates tools, systems, and materials as necessary.