Citizens Financial Group (CFG) Responds to CFPB Action

Citizens Financial Group, Inc. (NYSE: CFG) today responded to a Consumer Financial Protection Bureau (CFPB) complaint arising from certain billing errors and related issues that impacted a very small subset of Citizens’ credit card customers a number of years ago. Citizens will vigorously challenge the CFPB’s action, which is legally unwarranted and includes demands far out of line with actual customer impact.

Nearly five years ago, Citizens self-identified operational errors that resulted in a small impact across approximately 2%, or about 25,000, of Citizens’ approximately 1.2 million credit card customers. Citizens contacted the CFPB to report the issue while voluntarily beginning remediation efforts to ensure that no customers were affected. These efforts were all completed shortly after the issues were discovered and the bank did not receive a single customer complaint during or after the remediation. However, even after Citizens’ proactive remediation efforts and the nearly five years that have since passed, the CFPB has resurfaced this matter well beyond the expiration of the statute of limitations.

“We are puzzled and disappointed by the CFPB’s stance with respect to these long-resolved issues. Citizens fully addressed these matters within months of self-identifying, self-reporting and voluntarily remediating them more than four years ago,” said Stephen T. Gannon, General Counsel of Citizens. “The CFPB’s demands are wholly disproportionate to the issues at hand, and we strongly believe that the Bureau’s claims are unwarranted on both the facts and the law. We intend to vigorously contest the CFPB’s claims and are highly confident in the merits of our position.”

Citizens believes that the CFPB’s action is misguided for the following reasons:

• There is no harm remaining to be remediated. Citizens self-identified and escalated these issues following an end-to-end review of its operations which it began in first quarter 2015. The CFPB’s filing against Citizens, nearly five years later, ignores the swift, corrective actions that Citizens took. The CFPB itself has previously described the kind of approach taken by Citizens to address these issues as “responsible conduct.” Following its subsequent examinations, the Bureau has indicated through its ratings that it is satisfied with the bank’s controls over its card operations, supporting the Citizens’ position that it has long removed any need for regulatory intervention.

• Citizens greatly exceeded all obligations to make customers whole. Citizens voluntarily paid approximately $750,000 in remediation to a far broader set of customers than required by applicable rules.

• The CFPB’s claims contradict its own standards. The CFPB is ignoring its own standards for “responsible conduct” by pursuing this matter after Citizens met all requirements for remediating the issues. Moreover, because the CFPB waited until well after Citizens corrected these issues to come forward, all of its claims fall outside of the one-year statute of limitations that governs claims under the Truth In Lending Act and Regulation Z.

Added Gannon: “We are proud of our commitment to transparency, our vigorous compliance programs, and our consistent effort to treat customers fairly and be a responsible company. We have received positive assessments of this program from all who have examined it, including the CFPB.”

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