Compliance Costs Supporting Statement A Renewal 2015.10.27 (FINAL)

CONSUMER FINANCIAL PROTECTION BUREAU INFORMATION
COLLECTION REQUEST – SUPPORTING STATEMENT
GENERIC INFORMATION COLLECTION PLAN FOR INFORMATION ON
COMPLIANCE COSTS AND OTHER EFFECTS OF REGULATIONS
OMB CONTROL NUMBER: 3170-0032

TERMS OF CLEARANCE: Not applicable. The Office of Management and Budget (OMB)
provided no actionable Terms of Clearance when this generic information collection plan was last
approved by OMB on February 15, 2015.
ABSTRACT: The Dodd-Frank Wall Street Reform and Consumer Protection Act requires or
authorizes the Consumer Financial Projection Bureau to implement new consumer protections in
certain sectors of financial markets, including the mortgage and remittance industries. The
information collected is required in order to effectively incorporate information from providers
concerning compliance costs and other effects of regulations into potential rulemakings.
A. JUSTIFICATION
1. Circumstances Necessitating the Data Collection
Congress created the Consumer Financial Protection Bureau (“CFPB” or “the Bureau”) in July
2010 when the Dodd-Frank Wall Street Reform and Consumer Protection Act (“the Act” or “the
Dodd-Frank Act”) was enacted. The Act accords the Bureau responsibility for implementing,
interpreting, and assuring compliance with various Federal consumer financial protection laws
on the part of depository and non-depository providers
of consumer financial products and
1
services (“covered persons” or “Providers”).1 In order to fully understand the implications of the
Bureau’s regulations, the Research, Markets, and Regulations (“RMR”) division of the CFPB
seeks approval to collect information on compliance costs, benefits, and other impacts of its
existing rules and any new, potential rules the CFPB may promulgate.2
As outlined in the Act, among the Bureau’s objectives is to identify regulations that are
“outdated, unnecessary,
or unduly burdensome” in order for the Bureau to reduce unwarranted
33
regulatory burden. In order to determine the extent to which the Bureau’s rules present undue
burden on the consumer financial industry and to identify the causes of such burden, the Bureau
will collect qualitative information on the costs and impacts of regulations on a Provider’s
businesses and operations. The Bureau may also gather information on the effects of regulations
on the business processes of third-party service providers (“service providers”) that offer
products and services that address compliance and operational needs of covered persons. A
robust understanding of the process, systems, and decision-making involved in regulatory
compliance along with preliminary estimates of associated costs will help the Bureau develop
policy solutions that could potentially reduce undue burden on Providers, without sacrificing the
benefits of regulations on both consumers and Providers.
Improving available information about compliance costs and other economic implications of
1
2

3

See Dodd-Frank Act, Pub. L. No. 111-203, Sec. 1021
See Dodd-Frank Act, Pub. L. No. 111-203, Sec. 1022

See Dodd-Frank Act, Pub. L. No. 111-203, Sec. 1021(b)(3)

regulations also enriches the data needed to fulfill statutory responsibilities both for rules that the
Bureau is required to promulgate under the Dodd-Frank Act and for other potential rulemakings.
In particular, section 1022 of the Dodd-Frank Act calls for the Bureau to consider the potential
benefits and costs of a regulation to consumers and covered persons, including the potential
reduction of consumer access to financial products or services; the impact on depository
institutions and credit unions with $10 billion or less in total assets as described in section 1026
4
of the Act; and the impact on consumers in rural areas. The Regulatory Flexibility Act requires
the Bureau to consider compliance and related impacts of potential regulations on small
5
Providers. The Paperwork Reduction Act requires the Bureau to estimate burdens of disclosure
requirements, a common element of financial services laws, and other information collections.6
With respect to potential rules, better information about possible compliance costs and other
economic implications can promote the public interest. Notices of proposed rulemakings
(NPRMs) with qualitative information about the nature and scope of compliance costs obtained
from the collections can elicit more useful public comments. Gathering information and data
prior to a rule proposal would allow the Bureau to develop more robust proposals, as well as
afford the public with a more nuanced understanding of a particular regulation or policy area.
The Bureau will use standard channels of gathering public feedback on its regulations, such as
Federal Register notices, Requests for Information, and Small Business Review Panels. In
addition, the Bureau is required to assess effectiveness, among other things, of any significant
rules it adopts no later than five years after the effective date of the rule.8 The information
collections under this clearance would offer covered persons and service providers an additional
opportunity to provide the Bureau with deeper insight into significant contributors to costs at
their respective institutions. The ability to gather qualitative information on a structured basis
from representative institutions will enhance the information taken into consideration when the
Bureau develops and evaluates its rules. By engaging directly with financial institutions and
their service providers, the Bureau can also better understand a variety of implicit and
potentially unexpected costs, as well as potential benefits, that stem from its existing
regulations.
Information on compliance costs is not widely available in business literature or publicly
available firm data. Regulatory financial statements and quarterly earnings statements provide
data regarding a Provider’s expenses; however, they do not distinguish costs that are related to
compliance with regulatory requirements. Furthermore, available literature on compliance costs
and regulatory burden are outdated and may not reflect current industry observations.
2. Use of the Information
The collections will gather qualitative information on the costs and impacts of regulations on the
businesses and operations of Providers and on their customers across different sectors of the
consumer financial industry. The Bureau seeks to better understand the business processes,
business decisions, and other costs and benefits for covered persons and, by extension, their
customers from potential rules and existing regulations. The Bureau will gather information on
the direct costs resulting from the implementation and maintenance of different processes and
systems for regulatory compliance. Beyond first-order, operational compliance costs, the
Bureau may also investigate the effects of a potential or existing regulation on the business
4

See Dodd-Frank Act, Pub. L. No. 111-203, Sec. 1022(b)(2), 1026
See 5 U.S.C.§§ 603 et. Seq.

5
6

See 44 U.S.C. §§ 3506(c)(1)(A)(iv)

decisions of providers (such as what products to offer and how to price them) and, potentially,
on providers’ revenues or profits and, where possible, on their customers. These investigations
may also assist the Bureau to assess qualitatively how a potential or existing regulation may
affect market equilibrium and consumer access to financial products and services. Section 1022
specifically requires the Bureau to consider effects on consumer access of notice-and-comment
rules.
As indicated in section 1, information collections under this generic clearance represent an
additional channel for public feedback on CFPB’s existing rules and any potential rulemakings.
Additional input from covered persons and service providers would give the Bureau a more
nuanced understanding of costs, which it can use to provide solutions for reducing undue
regulatory burden without limiting the benefits of regulation for both consumers and Providers.
To that end, RMR anticipates using the information from these collections to conduct formative
research that will:


Inform but not serve as the sole influencer on the Bureau’s various rulemaking initiatives
announced in the Bureau’s regulatory agenda;



Inform but not serve as the sole influencer on other potential rulemakings specifically
required or authorized by the Dodd-Frank Act;



Inform, along with other data and research the Bureau’s perspective on the appropriate
approach to regulation of various industries in its jurisdiction, such as short-term credit
products in various forms, debt collection, and consumer reporting;



Supplement available information used for mandated analyses that the Bureau is required to
perform for potential new rules, such as cost-benefit analyses required under section 1022
of the Act, the Regulatory Flexibility Act, and the Paperwork Reduction Act;



Review impacts of the rules the Bureau inherited from other agencies;



Review significant new rules the Bureau adopts, as the Bureau is generally required to do
within five years; and



Develop new tools and solutions, such as compliance guides, that can help covered persons
and service providers limit the burden of implementation and maintenance of their
compliance systems for consumer financial regulations.

RMR will use information collections under this generic clearance to further develop and
conduct studies that are intended to inform the objectives listed above. Through this formative
research on compliance systems and processes, the Bureau will be able to better assess if aspects
of existing rules under its authority are unduly burdensome or not have the intended effects. In
doing so, it can propose solutions to limit such burden or increase effectiveness. With respect to
potential rulemakings, the research conducted under this clearance will help inform and spot
issues and subjects for other studies and public outreach the Bureau conducts for the purposes of
proposing new regulations.
Collection methods will include structured interviews (either in-person meetings or conference
calls), focus groups, and written questionnaires that may be delivered via e-mail or administered
through an online survey tool. In some cases, the Bureau may also conduct case studies to
gather more in- depth information from a targeted sample of institutions. The information that
the Bureau collects may be included in external reports or statutorily mandated analyses

published in the Federal Register. The Bureau will aggregate information whenever appropriate.
Recognizing that the generic collections will not be statistically valid, the Bureau will not use
any data to make absolute assertions about the costs or benefits of regulatory compliance.
Participants for each of the collection methods may be solicited through an online form that will
be made available on the Bureau’s website (www.consumerfinance.gov). The online form will
seek only what basic information is required to verify the potential participant’s contact
information and suitability for the research (e.g., job position with familiarity of compliance
functions at a covered financial institution, and size and type of institution). The information
collection instrument for soliciting participants is included as part of this clearance request.
The collected information under this clearance is not meant to be, and will not be treated as, a
sample that is statistically generalizable to the overall U.S. consumer financial industry. However,
the information may help the Bureau develop quantitative information collections that will further
inform the Bureau’s rulemakings. Should the Bureau conduct collections for quantitative
information, collection instruments will go through a full public comment period and follow the
standard approval process with OMB.
3. Use of Information Technology
With regard to collection methods involving structured interviews, focus groups, and case
studies, electronic software systems may be used to capture responses. For written
questionnaires, instruments may be delivered to respondents and sent back to the Bureau via email or may be administered through a third-party online survey tool. Whenever possible, the
Bureau will consider the use of information technology to reduce the burden of submitting
responses to collections. All internet forms will be submitted through this clearance for approval
by OMB prior to their implementation, including any new or revised instructions resulting from
this effort.
4. Efforts to Identify Duplication
The purpose of these information collections is not to replicate existing information collections
from the CFPB or other government agencies, or any other government survey research studies
of which the CFPB is aware. The information collections will not duplicate any government,
public or state research efforts of which the CFPB is aware.
The Bureau will monitor related work of researchers and other Federal regulatory agencies to
ensure that the Bureau’s research techniques reflect current knowledge and best practices and
avoid any unnecessary duplication.
5. Efforts to Minimize Burdens on Small Entities
The information collections under this clearance are expected to significantly benefit small
entities by improving the Bureau understands of the possible impacts of potential or existing
regulations on small entities. The collections are voluntary and are not anticipated to burden
small entities significantly. The Bureau will try to accommodate small entities should there be
any difficulties in participating in the collection. The Bureau will offer flexible schedules for its
collections to accommodate both the participants’ schedules and the Bureau’s project timetables.
Furthermore, the Bureau will try to determine the appropriate collection method (as listed in
section 2) to limit the burden on small entities and other respondents. For example, the online
survey tool reported in (section 3) offers a low burden instrument for institutions to provide
information to the Bureau should focus groups or structured interviews prove to be too

burdensome for the respondent.

6. Consequences of Less Frequent Collection and Obstacles to Burden Reduction
If this information is not collected, feedback from covered persons and service providers on
existing or potential proposed regulations will be limited to notices for public comment and
collections from fewer than ten firms. Less targeted or thorough information collections may
limit the Bureau’s assumptions about regulatory impact on the consumer financial marketplace.
Furthermore, as indicated in section 1, existing public information on the business processes
involved in compliance with consumer financial laws would remain limited. Related work of
researchers and other Federal regulatory agencies on compliance costs and effects of regulations
are outdated and may not necessarily capture what Providers’ current observations of regulatory
burden.
The information collections also give an additional opportunity for Providers charged with
implementing compliance systems under various federal consumer financial protection laws to
give input on how certain regulations impact their respective institutions. Such input offers the
potential to significantly improve upon the Bureau’s assessment of relative costs, benefits and
impacts of different potential rules before publishing them. As indicated in sections 1 and 2
above, information on regulatory costs and the significant contributors to cost will allow the
Bureau to identify possible solutions to reduce undue regulatory burden on Providers.
The CFPB is also mindful of the potential burden of gathering information and will seek to keep
this burden to a minimum. Wherever possible, the Bureau will seek to avoid imposing additional
burden upon individual institutions through multiple instruments. This can likely be
accomplished by streamlining and consolidating generic information request instruments
whenever practicable.
7. Circumstances Requiring Special Information Collection
No special circumstances require the collections to be conducted in a manner inconsistent with
the guidelines in 5 CFR 1320.5(d).
8. Consultation Outside the Agency
The Bureau solicited comments on these information collections through a 60-day Federal
Register notice, which was published on June 14, 2012 (77 FR 35658) The Bureau met also with
several industry groups, bank representatives, and other Federal financial regulatory agencies to
discuss the availability of compliance cost data and the challenges in collecting it. In addition, the
groups and representatives offered recommendations for the Bureau to consider when designing a
collection instrument.7
The CFPB carefully considered the comments we received at that time. In addition, in accordance
with 5 CFR 1320.8(d)(1), the Bureau has published a notice in the Federal Register allowing the
7

The Bureau previously had solicited comments on a proposed information collection with the same name as this
collection – Generic Clearance for Collection of Information on Compliance Costs and Other Effects of Regulations
– through a 60-day Federal Register notice, which was published on May 15, 2012 (77 FR 28571) (“May notice”) .
On June 22, 2012 the May notice was withdrawn (77 FR 37660), and the June 14, 2012 (77 FR 35658) notice (“June
notice”) was filed. In the withdrawal, the CFPB indicated that it would consider any comments provided to the May
notice as comments to the June notice.

public 60 days to comment on this proposed renewal of the request for clearance to conduct
research. No comments were received. Further, and in accordance with 5 CFR 1320.5(a)(1)(iv),
the Bureau will publish a notice in the Federal Register allowing the public 30 days to comment
on the submission of this information collection request to the Office of Management and Budget.
9. Payments or Gifts to Respondents
No payments or gifts will be provided to respondents.
10. Assurances of Confidentiality
For each participating institution, the Bureau will not collect any personally identifiable
information (PII) beyond the name, title, email and phone number of the individual(s)
representing the institution.
The Bureau will not disclose the information collected except to the extent it is required to do so
by law and as provided in the Privacy Act Statement on the collection instruments. As applicable,
each information collection request made under this generic will name and cite the System of
Records Notice (SORN) and Privacy Impact Assessment (PIA) as well as describe how potential
respondents are informed of any privacy and/or confidentially expectations. Further, any pledge
of confidentiality will be accompanied with the authority for such a pledge.

11. Justification for Sensitive Questions
The information collections do not include questions of a sensitive nature.
12. Estimated Burden of Information Collection
The following table presents estimates of the total number of respondents and burden hours on
an annual basis for proposed collections. The number of respondents and average burden per
response for a specific collection will depend on the methodology used for gathering
information. These estimates, as well as the mix of collection methods used, may be adjusted
slightly depending on the rule under consideration in the instrument, accommodating schedules
for interactive collections, and preference for a specific collection method over another. Further
details on estimated respondents and burden will be provided in each instrument approval
request.
Exhibit 1: Burden Summary Table
Process

Number of
respondents

Number of
responses per
respondent

Number of
annual
responses

Average burden
per response
(hours)

Total burden
(hours)

Online Volunteer
Solicitation

2,800

1

2,800

0.08

233

Structured
Interviews

1,200

1

1,200

1.5

1,800

Focus Groups

75

1

75

3

225

Travel time to sites
for focus groups
and in-person
interviews

350

1

350

1

350

Written
Questionnaires

4000

1

4,000

1

4,000

Case Studies

75

1

75

32

2,400

Annual Totals:

8,150*

--

8,500

--

9,008

Three Year Totals:

24,450

--

25,500

--

27,024

*Note: The 350 respondents associated with travel time are a subset of other respondent types.

The proposed online volunteer solicitation may take up to five minutes to collect and would only
be conducted once during the duration of the generic clearance.
Structured interviews and focus groups may take up to 1.5 hours per session, with up to an
additional 1.5 hours of preparation. Written questionnaires delivered through e-mail or online
surveys may take up to 1 hour to complete since institution representatives are able to read and
respond to questions at their own pace. The Bureau estimates that background research for
written questionnaires may take up to an additional 1 hour of preparation. These estimates were
based on the approximate duration of separate meetings the Bureau held with industry groups,
and community banks. During these meetings, questions on compliance systems and associated
costs, similar to those in this information collection, were discussed.
Case studies at individual firms would require interviews with various individuals at the
institution. For this collection method, the estimated burden on a respondent is up to 32 hours.
This includes 16 hours (or two full-time work days) of Bureau on-site presence, and as many as
16 hours of respondent research and preparation.
8

The Bureau may request approval for multiple instruments per year for each of the potential
collection methods (structured interviews, focus groups, written questionnaires, and case
studies).
The financial burden on the respondents will primarily comprise9 of employee wages. Based on
the average hourly wages in the credit intermediation industry, 17 the annual financial burden
on the respondent universe would be up to $978,502. This assumes that a compliance officer
and a representative from the respondent’s management staff are both involved in providing
information for the collection process. We assume that the total respondents are comprised
primarily of compliance officers (75%).

8

The Bureau estimates that the maximum annual number of structured interviews and written questionnaires is up
to 10 instruments each. The maximum annual number of collections through focus groups and case studies is up to
5 instruments each. This is a total of up to 30 instruments per year.
9
Bureau of Labor Statistics, May 2014 National Industry-Specific Occupational Employment and Wage Estimates:
NAICS 522300 - Activities Related to Credit Intermediation (available at
http://www.bls.gov/oes/current/naics4_522300.htm).

Compliance Officer
Avg. Hourly Wage = $32.69

Management
Occupations
Avg. Hourly Wage = $54.08

Burden
Hours for All
Respondents Total Cost

Burden
Hours for All
Respondents

Online Volunteer Solicitation
Structured Interviews
Focus Groups
Travel time to sites for focus
groups and in-person
interviews
Written Questionnaires
Case Studies
TOTAL

1350
170

$44,132
$5,557

260
3000
1800

$8,499
$98,070
$58,842
$215,100

2800
450
55

Total
Cost

Total Cost
$151,434
$24,336
$2,974

$151,424
$68,468
$8,531

$4,867
$54,080
$32,448
$270,129

$13,366
$152,150
$91,290
$485,229

90
1000
600

13. Estimated Total Annual Cost Burden to Respondents or Recordkeepers
There will be no annualized capital or start-up costs for the respondents to collect and submit
this information.
14. Estimated Cost to the Federal Government
The Bureau does not anticipate significant costs to the federal government as a result
of implementing these information collections. For some collections, the Bureau may
retain a contractor to assist with instrument development, as well as collection and
analysis of information. Costs to the Bureau will be provided in each information
collection request made under this generic.
15. Program Changes or Adjustments
Exhibit 2: Burden Change Summary
Total
Respondents

Responses

Burden Hours

Cost Burden
(O & M)

Total Burden
Requested

24,450

25,500

27,024

0

Current OMB
Inventory

2,750

2,750

9,008

0

+21,700

+22,750

+18,016

0

0

0

0

0

Difference (+/-)
Program Change

Discretionary

0

0

0

0

New Statute

0

0

0

$0

Violation

0

0

0

$0

21,700

22,750

18,016

$0

Adjustment

The changes in annual respondents and annual responses comes from the Bureau revising its
burden estimates to reflect future plans and actual usage of this clearance in the prior three years.
The estimated total annual burden hours will remain constant as the Bureau plans to use less
burdensome collection methods, but may expand the frequency of information collections
submitted under this plan. The majority of the change in the number of respondents, responses,
and hours inventoried under this OMB control number results from the Bureau capturing the
projected three-year total burden as opposed to only the annual burden as previously inventoried
with OMB.
16. Plans for Tabulation, Statistical Analysis, and Publication
The Bureau anticipates displaying aggregated information in a Federal Register notice for the
purposes of a Section 1022 analysis, and assessments related to the Regulatory Flexibility Act
and the Paperwork Reduction Act.
In addition, the Bureau may publish aggregated information from certain collections in publicly
available reports.

17. Display of Expiration Date
The OMB control number and expiration date associated with this PRA submission will be
displayed on the Federal government’s electronic PRA docket at www.reginfo.gov. In
addition, all instruments used for collecting data under any collection submitted under this
generic information collection plan will display the OMB control number wherever and
when appropriate.
18. Exceptions to the Certification Requirement
The Bureau certifies that this collection of information is consistent with the requirements of 5
CFR 1320.9, and the related provisions of 5 CFR 1320.8(b)(3) and is not seeking an exemption to
these certification requirements.