In 2010, Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act established the Consumer Financial Protection Bureau (CFPB) to regulate certain financial institutions and other organizations offering consumer financial products or services. Given the bureau’s broad supervisory and enforcement powers, all eyes are watching to discover how the CFPB will operate and what are the limits of its authority. One issue that has caught of the attention of many practitioners and even the American Bar Association is the impact of disclosing privileged materials to the CFPB and whether future third-party litigants might be able to obtain the privileged information.
Non-Waiver Statutory and Regulatory Protections
In CFPB Bulletin 12-01, CFPB’s general counsel remarks that “because entities must comply with the Bureau’s supervisory requests for information, the provision of privileged information to the Bureau would not be considered voluntary and would thus not waive any privilege that attached to such information.” Practitioners and regulated entities voiced concern with this position because a majority of federal circuit courts reject the selective waiver doctrine that allows them to share privileged information with the government without waiving the privilege. To address these concerns, the CFPB issued a rule providing that submission of privileged material to the bureau will not constitute a waiver under federal or state law. Congress also took steps to protect privileged materials submitted to the CFPB. Now, 12 U.S.C. § 1828(x), a provision familiar to many practicing before the OCC, was amended to include the CFPB so that entities furnishing privileged information do not waive or impair their claim of privilege. An amendment to the Federal Deposit Insurance Act also permits the CFPB to disclose privileged information to certain other federal agencies without destroying the privilege.
Understandably, there are fears among practitioners because the bounds of these “protections” have not yet been tested. For instance, while the rule declares “work product” falls under the category of non-waiver, the statutes enacted do not mention work product. There is an argument, as many others have pointed out, that third-party civil litigants could claim the statutory provisions do not extend to work product.
Recent Federal Case on Privilege and the CFPB
Although limited to the enforcement context, one of the only court decisions addressing privilege and the CFPB was issued on Oct. 17, 2013. All practitioners should take note. Although not the main issue in the case, the U.S. District Court for the District of Columbia reiterated that in response to a civil investigative demand (CID), “a recipient may withhold responsive material based on a ‘claim of privilege.’” The court noted that “the CIDs issued by the Bureau are not self-enforcing …” and, therefore, “the Bureau could never have compelled … information without a court proceeding in which a claim of privilege could be asserted.”
Methods of Protecting Privileged Information
Considering all this, there are a few takeaways. If you are facing a request from the CFPB that involves the disclosure of privileged materials, determine whether it is in the recipient’s best interest to refuse to produce the privileged information.
Understanding that an entity might want to stay in the good graces of its regulator by cooperating and turning over privileged information, be sure to take steps to protect privileged materials. You might consider whether it is acceptable to have a “reading room” for review of privileged information rather than turn over physical copies of privileged documents to the CFPB. Always include caveat markings such as “Privileged and Confidential” and “Submitted Under 1828(x).” If a reading room is not a viable option, in a cover letter producing documents include non-wavier language citing the rule and statutes described above. Finally, seek a confidentiality agreement with the CFPB memorializing that submission of privileged information shall not be construed as waiving, destroying or otherwise impacting any claim of privilege. It is also a good idea to request notice prior to disclosure should the CFPB share the information with another government agency, so your entity may take action to protect the information if necessary. These methods, although not foolproof, are your best defense in protecting privileged information.
 12 U.S.C. §§ 5481 et seq.
 CFPB Bulletin 12-01, Jan. 4, 2012, p. 2.
 12 CFR Part 1070.
 12 U.S.C. § 1821(t).
 Morgan Drexen v. Consumer Financial Protection Bureau, — F. Supp. 2d. —-, 2013 WL 5664696, at *5 (Oct. 17, 2013, D.D.C.) (citing 12 C.F.R. § 1080.8(a)).
 Id. at 16.