The Consumer Financial Protection Bureau may have encouraged some examiners to move through its examiner commissioning program before they were ready, limiting their likelihood of success, the agency's Office of Inspector General said in a report released Monday.

The CFPB has taken steps to enhance the examiner commissioning program, which the bureau has described as an important component of its supervisory program, since it was implemented in 2014, the agency's watchdog said.

But the OIG report found that in the process of the bureau's division of supervision, enforcement and fair lending needing more commissioned examiners, some had advanced through the program before they were fully prepared.

"We will continue to hold companies accountable when they break the law and harm consumers," says Chris D'Angelo, associate director for supervision, enforcement and fair lending at the Consumer Financial Protection Bureau.
"The bureau agrees with each of the recommendations, and expects to implement a third of them within the next 30 days," said Christopher D'Angelo, the CFPB's associate director of supervision, enforcement and fair lending.

"We found that these resource constraints contributed to regional management allowing and, in some instances, encouraging examiners to proceed through the [examiner commissioning program] before they were ready," the OIG report stated. "We attribute examiners proceeding before being fully prepared to several factors, including management’s need for commissioned examiners to lead examinations and carry out the CFPB’s mission, examiners’ advancement incentives, and ineffective controls."

Among its recommendations, the OIG report called on the CFPB to develop a formal written method to evaluate and update the examiner commissioner program.

"The bureau agrees with each of the recommendations, and expects to implement a third of them within the next 30 days," Christopher D'Angelo, associate director of the division of supervision, enforcement and fair lending, wrote in a Sept. 8 letter to Melissa Heist, the associate inspector general for audit and evaluations.

The OIG compared pass rates on the commissioning program's two primary assessments: a multiple choice test and an examiner-in-charge case study. While over 90% passed the multiple choice test, under 50% passed the case study portion. That suggested "that candidates may be moving to the EIC case study before they are fully prepared," the report said.

Examiners typically have to wait six months if they fail either a multiple choice test or the case study, and must wait a year if they fail two of them. Three failures is grounds for dismissal.

The OIG recommended that the CFPB update the program's guidance to include the requirement that examiners receive the opportunity to lead at least one exam to fulfill its acting "examiner-in-charge" requirements.

It also suggested that the CFPB specify which types of examinations provide examiners with exposure to all aspects of their roles and responsibilities. The CFPB also should create formal guidelines for informing job applicants about the examiner commissioning program's requirements, the report said.

The OIG also recommended that the bureau develop guidance to support its on-the-job training program.

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Kate Berry

Kate Berry

Kate Berry covers the Consumer Financial Protection Bureau for American Banker.