The U.S. Consumer Financial Protection Bureau (CFPB) is seeking to introduce a whistleblower program that would pay financial awards for enforcement tips.
The CFPB is seeking to amend legislation that was adopted in response to the financial crisis, known as the Dodd-Frank Act, to provide the authority to establish a whistleblower award program.
“Under the proposed legislation, in cases where a whistleblower provides voluntary information that leads to a successful enforcement action, the bureau will be able to pay an award based on a percentage of the monetary sanctions collected in the action,” the CFPB said.
The proposed approach follows whistleblower award programs that have been established by other U.S. regulators, such as the U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission.
In Canada, the Ontario Securities Commission (OSC) also operates a paid whistleblower program.
Similar to the SEC’s program, the CFPB’s proposed whistleblower program would enable the agency to pay between 10% and 30% of the sanctions collected in enforcement cases that generate at least US$1 million in monetary sanctions.
However, the CFPB would cap awards at US$10 million; whereas the SEC has paid single awards of over US$30 million and a joint award of around US$50 million.
“The incentive created for employees to report wrongdoing to the bureau will assist in advancing enforcement cases, especially as it relates to fair lending violations,” the CFPB said.
Alongside the proposed paid whistleblower initiative, the CFPB also said that it is implementing an advisory opinion program that would aim to provide companies with guidance on their legal and regulatory obligations.
“These steps reinforce the Bureau’s commitment to preventing consumer harm,”said CFPB director Kathleen Kraninger.
“Advisory opinions will ensure that companies know what compliance entails and what constitutes a violation. We also want to incentivize whistleblowers to contact us if they believe their employer is not complying with the law,” Kraninger said.