CFPB to Invite Public Comment on Disclosure Testing

The American Bankers Association appreciates the opportunity to comment on the Bureau of Consumer Financial Protection’s (Bureau) request for re-approval, under the Paperwork Reduction Act of 1995 (PRA), of a generic clearance to develop and test consumer financial disclosures and related materials (Disclosure Generic Clearance). In its request, the Bureau proposes to modify the existing Disclosure Generic Clearance to invite public comment on each individual information collection the Bureau conducts under this generic clearance.

ABA commends the Bureau for making this important modification to the Disclosure Generic Clearance. The modification is a first step toward addressing concerns that we previously raised regarding the proper use of a generic clearance. As you are aware, guidance issued by the White House’s Office of Information and Regulatory Affairs (OIRA) describes the PRA process, including the “generic clearance process,” which permits an agency to conduct surveys and similar low burden information collections without seeking public comment on each collection. Because the public does not have an opportunity to comment on the individual collections, OIRA’s guidance restricts use of a generic clearance to collections that “do not raise substantive or policy issues.” Collections that raise substantive or policy issues must be conducted under a standard clearance, which provides the public with an opportunity to comment on each collection. This framework ensures that the public can provide feedback on any collection that may be relied upon for rulemaking or other policymaking, thereby advancing the PRA’s purposes to “maximize the utility of information collected” and promote “accountability[] and openness in Government and society.”

The Bureau’s request for re-approval of the Disclosure Generic Clearance acknowledges that the agency has used the existing generic clearance to test consumer financial disclosures and that this testing influenced a number of the Bureau’s rulemakings. The Bureau also anticipates that ongoing rulemakings will rely on disclosure testing conducted under this clearance (assuming it is re-approved), as described below—

This clearance will be used to conduct both qualitative and quantitative testing of disclosures and other materials relating to the features of consumer financial products and services. To illustrate, the Bureau has conducted qualitative testing of disclosures for consumer financial products and services such as mortgage servicing, prepaid card accounts, payday loan payments, and mortgage origination. In each case, the results helped to inform the Bureau in developing a notice of proposed rulemaking. The Bureau anticipates ongoing rulemakings and other initiatives for a range of consumer financial products to include consumer testing of potential disclosure forms.

Because the Bureau anticipates ongoing and future rulemakings will rely on testing conducted under the Disclosure Generic Clearance, it is critical that each proposed test (or other information collection) be subject to public comment. The comments submitted can identify weaknesses in the collection’s proposed methodology and better ensure that the collection produces reliable data. In a comment letter filed in 2016, we urged OIRA to require all agencies to provide notice to the public whenever the agency requests approval, under a generic clearance, of an individual information collection on a topic that is or may be the subject of rulemaking.

We applaud the Bureau for recognizing the important role that public comments can play in maximizing the utility of information collected and for proposing to modify the Disclosure Generic Clearance to provide the public with the opportunity to comment.

Although the Bureau has taken this important step to promote transparency and accountability, other agencies (including, potentially, the Bureau in the future) may not provide this opportunity when seeking approval of generic clearances that could be used to conduct substantive or policy-related collections. Consequently, we reiterate our previous request that OIRA revise its guidance to require an agency to provide notice to the public whenever it requests approval, under a generic clearance, of an individual information collection on a topic that is or may be the subject of rulemaking. As we stated in our earlier letter to OIRA, it is plausible that an agency may believe that a requested collection concerns an issue that is non-substantive and not related to policy, even though the subject of the request is listed on the agency’s rulemaking agenda. In these cases, public notice of the request would provide members of the public who disagree with the agency’s assessment of policy relevance with an opportunity to comment on the proposed collection.

Thank you for your attention to these important issues.