In a somewhat strange move akin to alerting the fox to get out of the henhouse, the Consumer Financial Protection Bureau (CFPB) announced on Monday that it will forewarn targets of potential investigations to give the targets an opportunity to respond before prosecutions are pursued.
Raj Date, special adviser to the Treasury Department for the CFPB, said the new agency will consider the target company’s response before the Bureau ultimately decides whether to begin legal action.
“The early warning notice announced today strikes a balance between the goal of fairness to those being investigated and our mission to protect consumers,” Date said. “This process will help us fulfill our commitment to transparency in enforcing the law.”
The early warning notice is not required by law but the CFPB believes it will promote even-handed enforcement of consumer financial laws. The decision to give notice in particular cases is discretionary and will depend on factors such as whether prompt action is needed.
We’re not sure who or what the CFPB is trying to protect here. Definitely not consumers. What is the motivation for the new policy? Will corporations and other unscrupulous entities now get a heads-up when they are being investigated so they can prepare their defense?
What do you think of the new early warning system? Please share your thoughts.