Cfpb Quiz I Compliance Review

1.

The statutory frameworks for supervision of large depository institutions and their affiliates and for non-depository consumer financial service companies are largely the same,9 although the supervision authority for each is found in separate sections of the Act. The frameworks include: Pick the one that does not belong.

A.

Supervision
B.

To coordinate with other Federal and state regulators
C.

To use where possible publicly available information and existing reports to Federal or state regulators pertaining to supervised entities.
D.

Bankruptcy laws

Correct Answer
D. Bankruptcy laws

Explanation
The other options listed (supervision, coordination with other regulators, and use of publicly available information) are all components of the statutory frameworks for supervision of large depository institutions and non-depository consumer financial service companies. However, bankruptcy laws are not directly related to the supervision of these institutions and companies, making them the odd one out.

Rate this question:

2.

The Bureau’s purpose is set forth by Section 1021 of the Act: PURPOSE.—The Bureau shall seek to implement and, where applicable, enforce Federal consumer financial law consistently for the purpose of ensuring that all consumers have access to markets for consumer financial products and services and that markets for consumer financial products and services are fair, transparent, and competitive

A.

True
B.

False

Correct Answer
A. True

Explanation
The given statement is true. According to Section 1021 of the Act, the purpose of the Bureau is to implement and enforce Federal consumer financial law consistently. This is done to ensure that all consumers have access to markets for consumer financial products and services, and to ensure that these markets are fair, transparent, and competitive.

Rate this question:

3.

CFPB has responsibility to implement, examine for compliance with, and enforce “Federal consumer financial law.”4 Those laws include, among other things, Title X itself, which prohibits unfair, deceptive, or abusive acts and practices in connection with consumer financial products and services,5 and the following “enumerated consumer laws”6 and the implementing regulations.

A.

True
B.

False

Correct Answer
A. True

Explanation
The statement is true because the CFPB (Consumer Financial Protection Bureau) is indeed responsible for implementing, examining for compliance with, and enforcing federal consumer financial laws. These laws include Title X, which prohibits unfair, deceptive, or abusive acts and practices in connection with consumer financial products and services, as well as other enumerated consumer laws and their implementing regulations.

Rate this question:

4.

The purpose of CFPB supervision, including examination, to: o assess compliance with Federal consumer financial laws, o obtain information about activities and compliance systems or procedures, and o detect and assess risks to consumers and to markets for consumer financial products and services;

A.

True
B.

False

Correct Answer
A. True

Explanation
The purpose of CFPB supervision, including examination, is to assess compliance with Federal consumer financial laws, obtain information about activities and compliance systems or procedures, and detect and assess risks to consumers and to markets for consumer financial products and services.

Rate this question:

5.

An effective compliance management system should ensure that a supervised entity is responsive and responsible in handling consumer complaints and inquiries. Intelligence gathered from consumer contacts should be organized, retained, and used as part of an institution’s compliance management system.

A.

True
B.

False

Correct Answer
A. True

Explanation
An effective compliance management system should prioritize the handling of consumer complaints and inquiries. This means that a supervised entity should be responsive and responsible in addressing these concerns. Additionally, intelligence gathered from consumer contacts should be properly organized, retained, and used as part of the institution's compliance management system. This ensures that the system is comprehensive and takes into account the feedback and experiences of consumers. Therefore, the statement is true.

Rate this question:

6.

What does ECOA stand for:

A.

Equal Credit Opportunity Act
B.

Equal Credit Opportunity Advice
C.

Everyone's Credit Opportunity Act
D.

None of the Above

Correct Answer
A. Equal Credit Opportunity Act

Explanation
The correct answer is Equal Credit Opportunity Act. This act is a federal law that prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or receipt of public assistance. It ensures that all individuals have equal access to credit and are treated fairly by lenders.

Rate this question:

7.

An effective compliance management system commonly has four interdependent control components: which one is not included?

A.

Board and management oversight
B.

IRS Audit
C.

Compliance program
D.

Response to consumer complaints
E.

Compliance audit

Correct Answer
B. IRS Audit

Explanation
The correct answer is IRS Audit. An effective compliance management system typically includes board and management oversight, a compliance program, response to consumer complaints, and compliance audits. However, an IRS audit is not typically considered as one of the interdependent control components of a compliance management system. IRS audits are conducted by the Internal Revenue Service to ensure compliance with tax laws, but they are not directly related to the overall management and oversight of compliance within an organization.

Rate this question:

8.

Is this a true statement of CFPB's ECOA responsibility; CFPB to refer matters to DOJ whenever the CFPB “has reason to believe that one or more creditors has engaged in a pattern or practice of discouraging or denying applications for credit in violation of Section 1691(a)” of ECOA, which states ECOA’s basic prohibitions against discrimination.23 In matters that do not involve a pattern or practice of discouragement or denial, the CFPB may refer the matter to the DOJ whenever the agency has reason to believe that one or more creditors has violated Section 1691(a).24 Headquarters will handle referral of appropriate matters to DOJ.

A.

True
B.

False

Correct Answer
A. True

Explanation
The statement is true because according to the passage, the CFPB is responsible for referring matters to the DOJ when they have reason to believe that creditors have engaged in a pattern or practice of discouraging or denying credit applications in violation of ECOA. Additionally, the CFPB may also refer matters to the DOJ when they have reason to believe that creditors have violated ECOA, even if it does not involve a pattern or practice of discouragement or denial. The passage also mentions that headquarters will handle the referral of appropriate matters to the DOJ.

Rate this question:

9.

An effective compliance management system should ensure that a supervised entity is responsive and responsible in handling consumer complaints and inquiries. Intelligence gathered from consumer contacts should be organized, retained, and used as part of an institution’s compliance management system.

A.

True
B.

False

Correct Answer
A. True

Explanation
An effective compliance management system is crucial for ensuring that a supervised entity is responsive and responsible when dealing with consumer complaints and inquiries. This means that the system should be designed to gather intelligence from consumer contacts, organize and retain this information, and use it as part of the institution's compliance management system. By doing so, the institution can better understand and address any compliance issues or concerns raised by consumers, ultimately improving their overall compliance practices. Therefore, the statement "True" is an accurate reflection of the importance of an effective compliance management system in handling consumer complaints and inquiries.

Rate this question:

10.

Examiners will consider consumer complaints to determine whether: Which one does not belong.

A.

Consumer complaints and inquiries, regardless of where submitted, are appropriately recorded and categorized.
B.

Complaints and inquiries, whether regarding the entity or its service providers, are addressed and resolved promptly.
C.

Complaints that raise legal issues involving potential consumer harm from unfair treatment or discrimination, or other regulatory compliance issues, are appropriately escalated.
D.

Complaint data and individual cases drive adjustments to business practices as appropriate.
E.

Consumer complaints result in retrospective corrective action to correct the effects of the supervised entity’s actions when appropriate
F.

Weaknesses in the compliance management system exist, based on the nature or number of substantive complaints from consumers
G.

The nature of the settlement offered by the lender was over $100.

Correct Answer
G. The nature of the settlement offered by the lender was over $100.

Explanation
The given answer, "The nature of the settlement offered by the lender was over $100," does not belong because it is unrelated to the topic of consumer complaints and the evaluation of the compliance management system. The other statements in the passage discuss the appropriate recording and categorization of complaints, prompt addressing and resolution of complaints, escalation of legal issues, adjustments to business practices based on complaint data, retrospective corrective action, and weaknesses in the compliance management system. The statement about the settlement amount is not relevant to these topics.

Rate this question: