Rules of Practice for Adjudication Proceedings

<RULE> CONSUMER FINANCIAL PROTECTION BUREAU <CFR>12 CFR Part 1081</CFR> <DEPDOC>[Docket No. CFPB-2025-0012]</DEPDOC> <RIN>RIN 3170-AB33</RIN> <SUBJECT>Rules of Practice for Adjudication Proceedings</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Consumer Financial Protection Bureau. <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Rules of Practice for Adjudication Proceedings (Rules of Practice) govern adjudication proceedings conducted by the Consumer Financial Protection Bureau (CFPB). The CFPB issued a proposal to rescind amendments it adopted to the Rules of Practice on February 22, 2022, and March 29, 2023 (2022 and 2023 amendments). The 2022 and 2023 amendments that the Bureau proposed to rescind included a new deposition process, amendments concerning timing and deadlines, bifurcation of proceedings, the process for deciding dispositive motions, and requirements for issue exhaustion, as well as other technical changes. After considering the comments on the proposal, the CFPB has decided to rescind the amendments as proposed, except as related to narrow clarificatory and procedural changes. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This rule is effective on October 29, 2025. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Dave Gettler, Paralegal Specialist, Office of Regulations, at 202-435-7700 or at: <E T="03">https://reginquiries.consumerfinance.gov/.</E> If you require this document in an alternative electronic format, please contact <E T="03">CFPB_Accessibility@cfpb.gov</E> . </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> <HD SOURCE="HD2">A. Statutory Background and Regulatory History</HD> The Consumer Financial Protection Act of 2010 (CFPA) establishes the CFPB as an independent bureau in the Federal Reserve System and assigns the CFPB a range of rulemaking, enforcement, supervision, and other authorities. <SU>1</SU> <FTREF/> The CFPB's enforcement powers under the CFPA include section 1053, which authorizes it to conduct adjudication proceedings. <SU>2</SU> <FTREF/> The CFPB finalized the original version of the Rules of Practice, which govern adjudication proceedings, in 2012 (2012 Rule). <SU>3</SU> <FTREF/> The CFPB later finalized certain amendments, which addressed the issuance of temporary cease-and-desist orders, in 2014 (2014 Rule). <SU>4</SU> <FTREF/> <FTNT> <SU>1</SU>  Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203, 124 Stat. 1376, 1955-2113 (2010). </FTNT> <FTNT> <SU>2</SU>  12 U.S.C. 5563; <E T="03">see also</E> section 1052(b), 12 U.S.C. 5562(b) (addressing subpoenas). </FTNT> <FTNT> <SU>3</SU>  77 FR 39057 (June 29, 2012); <E T="03">see also</E> 76 FR 45337 (July 28, 2011) (interim final rule). </FTNT> <FTNT> <SU>4</SU>  79 FR 34622 (June 18, 2014); <E T="03">see also</E> 78 FR 59163 (Sept. 26, 2013) (interim final rule). </FTNT> The CFPB subsequently made further changes to the Rules of Practice, which were adopted on February 22, 2022, at 87 FR 10028, and on March 29, 2023, at 88 FR 18382 (2022 and 2023 amendments). These changes expanded parties' opportunities to conduct depositions in adjudication proceedings and made amendments concerning timing and deadlines, the content of answers, the scheduling conference, bifurcation of proceedings, the process for deciding dispositive motions, and requirements for issue exhaustion, as well as other technical changes. <HD SOURCE="HD2">B. Summary of the Rulemaking Process</HD> <HD SOURCE="HD3">Summary of the Proposed Rule To Rescind 2022 and 2023 Amendments</HD> In May 2025, the CFPB issued its proposal to rescind the 2022 and 2023 amendments. <SU>5</SU> <FTREF/> The CFPB noted concerns about the provisions of the 2022 and 2023 amendments that transferred authority to decide dispositive motions from the hearing officer who is presiding over the proceeding, normally an administrative law judge (ALJ), to the Director. This approach is atypical in the Executive Branch, where the norm is for hearing officers to decide dispositive motions, and industry commenters criticized it for concentrating authority in the Director at the expense of the hearing officer. With respect to other changes made by the amendments, the CFPB's preliminary view, subject to considering comments, was that they were largely unnecessary. <FTNT> <SU>5</SU>  90 FR 20241 (May 13, 2025). </FTNT> Although the CFPB's Rules of Practice are procedural rules exempt from the notice-and-comment requirements of the Administrative Procedure Act as rules of agency organization, procedure, and practice, the CFPB issued a proposal because it believes commenter feedback prior to promulgation is important to better understand the potential benefits or harms of changes to the Rules of Practice. <HD SOURCE="HD3">Summary of Comments</HD> The CFPB received six unique comments. These comments came from a trade association, a coalition of trade groups, a public policy think tank, and three individual commenters. Three comment letters, namely from the trade association, the coalition of trade groups, and the public policy think tank, supported the rescission of the amendments. These commenters were concerned that the amendments concentrated greater power in the Director, particularly by allowing the Director to rule on dispositive motions. Two individual commenters opposed rescinding the amendments, including by noting that the amendments enhanced procedural fairness and provided more clarity about deadlines. Finally, one individual commenter expressed comments supporting the rescission in part. After carefully considering these comments, the CFPB has decided to rescind the vast majority of the 2022 and 2023 amendments. However, the CFPB has decided to retain certain narrow amendments related to procedure and nomenclature. The CFPB addresses these changes and comments in more detail below. <HD SOURCE="HD3">Interagency Consultation</HD> Consistent with section 1022(b)(2)(B) of the CFPA, the CFPB has consulted with the prudential regulators and the Federal Trade Commission, including regarding consistency with any prudential, market, or systemic objectives administered by these agencies. <SU>6</SU> <FTREF/> <FTNT> <SU>6</SU>  Whether sections 1022(b)(2)(A) and 1022(b)(2)(B) are applicable to this rule is unclear, but in order to inform the rulemaking more fully the Bureau performed the described analysis and consultations. </FTNT> <HD SOURCE="HD1">II. Legal Authority</HD> Section 1053(e) of the CFPA provides that the CFPB “shall prescribe rules establishing such procedures as may be necessary to carry out” section 1053. <SU>7</SU> <FTREF/> Additionally, section 1022(b)(1) provides, in relevant part, that the CFPB's Director “may prescribe rules . . . as may be necessary or appropriate to enable the Bureau to administer and carry out the purposes and objectives of the Federal consumer financial laws, and to prevent evasions thereof.” <FTNT> <SU>7</SU>  12 U.S.C. 5563(e). </FTNT> <HD SOURCE="HD1">III. Final Rule Analysis</HD> <HD SOURCE="HD2">A. Rescission of Amended Sections Describing Dispositive Motions</HD> <HD SOURCE="HD3">1081.212 Dispositive Motions and 1081.213 Rulings on Dispositive Motions</HD> The 2022 and 2023 amendments changed §§ 1081.212 (Rule 212) and 1018.213 (Rule 213) to adopt a new procedure for rulings on dispositive motions, and made other minor conforming amendments. Specifically, the 2022 and 2023 amendments created a new process that allowed the Director to rule on a dispositive motion, refer the motion to the hearing officer, or rule on the motion in part and refer it in part. A dispositive motion includes a motion to dismiss or a motion for summary disposition. In its May 2025 proposal to rescind, the CFPB noted particular concerns that these amendments concentrated authority in the Director at the expense of the hearing officer. The CFPB also noted that this process was atypical in the Executive Branch, where the norm is for hearing officers to decide dispositive motions. One coalition of trade groups, one trade association, and one public policy think tank supported rescinding these amendments, particularly noting the concerns in the proposal about the harms related to concentration of authority in the Director. One commenter pointed out that the Director's new authority to rule on dispositive motions relinquished the authority of the administrative law judge. This commenter stated that this concentration of power was particularly concerning given that the Director is the same individual who initially authorizes the public enforcement actions. The coalition of trade associations also pointed out that concentrating authority in the Director could result in legal uncertainty and instability given that the Director often changes with new administrations. This commenter further noted that the amendments could risk depriving defendants of due process because the Director is not sufficiently impartial. The commenter pointed out that the Director personally approves the filing of the enforcement action and, therefore, has a vested interest in the success of that enforcement action. As a result, this commenter asserted that the amendments increase the risk that administrative proceedings before the CFPB will not provide the necessary impartiality and, therefore, the required procedural due process protections to defendant companies. Another commenter expressed a similar concern that this concentration of authority in the Director combines the distinct functions of investigator, prosecutor, and adjudicator, thus potentially undermining the fairness of the CFPB's adjudications. One commenter also stated that the new adjudicative process denie ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 178k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━