How much will the settlement cost Fifth Third?

The direct civil penalties total $20 million ($15 million plus $5 million). The filing does not quantify the redress cost, which depends on the number of affected consumers identified under the approved redress plans, so the total financial impact is not yet known.

Does the settlement admit wrongdoing?

No. Fifth Third neither admits nor denies the allegations, except for facts needed to establish jurisdiction. The Bank does, however, agree that the facts alleged in the CFPB's complaint may be treated as true in future proceedings to enforce the orders or in bankruptcy-related claims.

What does the auto lending portion of the settlement involve?

The CFPB found that Fifth Third placed and maintained duplicative force-placed collateral protection insurance on auto loans, charged premiums on terminated policies, provided inadequate payment notices, misrepresented cancellation timelines, and furnished inaccurate repossession data to credit bureaus. The program was discontinued in January 2019, and the Bank agreed to a $5 million penalty and redress for affected borrowers.

Could this settlement lead to more regulatory action?

The orders require ongoing compliance monitoring, periodic reporting, and board oversight, and the CFPB retains enforcement authority for any violations of the orders. The Bureau may also rely on these findings in future actions, so the settlement is not a complete shield against further regulatory scrutiny.

FIFTH THIRD BANCORP 8-K: Regulation FD

01—Abstract

Summary

Summary of the 8-K filed July 9, 2024. Cited figures are marked; the original filing is the authoritative source.

On July 9, 2024, Fifth Third Bancorp (FITB) disclosed that it reached a settlement with the Consumer Financial Protection Bureau (CFPB) resolving two matters.

The first is a lawsuit the CFPB filed on March 9, 2020, alleging violations of the Consumer Financial Protection Act, Truth in Lending Act, Truth in Savings Act, and related rules tied to account-opening sales practices. Under a Stipulated Final Judgment and Order, Fifth Third, without admitting or denying the allegations, agreed to pay a $15 million^a civil monetary penalty, maintain existing sales-incentive policies, build a compliance plan for account opening, and provide redress to customers with accounts opened between January 1, 2010 and December 31, 2016. The second is a Consent Order tied to a discontinued auto-lending collateral protection insurance (force-placed insurance) program that Fifth Third shut down in January 2019.

The Bank agreed to a $5 million^b civil penalty, maintain existing auto servicing policy changes, create a compliance plan, and provide redress for affected auto borrowers during a redress period from July 21, 2011 to December 31, 2020. The CFPB's findings describe duplicative force-placed policies, inaccurate credit-bureau reporting on related repossessions, and other servicing failures. For investors, the financial amount is modest: $20 million in combined civil penalties, plus unquantified redress costs, against a bank with more than $214 billion in total assets.

The more significant factors are the ongoing compliance obligations, including board oversight, periodic compliance reports, and a multi-year monitoring period, along with the potential for reputational impact. The company states the settlement concludes both matters and allows it to focus on long-term shareholder value. The filing does not disclose a separate accrual or expected redress amount, so investors should look to the company's upcoming periodic reports for the financial impact.

02—Key points

Key Highlights

Total civil money penalties of $20 million: $15 million for the account-opening sales practices lawsuit and $5 million for the auto collateral protection insurance consent order.
Sales-practices matter covers accounts opened January 1, 2010 through December 31, 2016, and requires redress and a compliance plan overseen by the Board.
Auto servicing matter concerns a force-placed insurance program discontinued in January 2019, with findings of over 37,000 duplicative or unnecessary policies from 2011 to 2019 and 1,005 related repossessions.
Redress obligations are not quantified in the filing; the Bank must submit redress plans for CFPB non-objection and pay redress within set deadlines.
Fifth Third neither admits nor denies the allegations and waives rights to challenge the orders, which limits near-term litigation risk from these specific matters.
Ongoing requirements include a sworn compliance progress report one year after entry, internal audit validation of redress, and potential CFPB enforcement for future violations.
The CFPB may use the described practices to establish a pattern or practice in future enforcement actions against the Bank and its affiliates.

03—Questions

Frequently Asked Questions

How much will the settlement cost Fifth Third?
The direct civil penalties total $20 million ($15 million plus $5 million). The filing does not quantify the redress cost, which depends on the number of affected consumers identified under the approved redress plans, so the total financial impact is not yet known.
Does the settlement admit wrongdoing?
No. Fifth Third neither admits nor denies the allegations, except for facts needed to establish jurisdiction. The Bank does, however, agree that the facts alleged in the CFPB's complaint may be treated as true in future proceedings to enforce the orders or in bankruptcy-related claims.
What does the auto lending portion of the settlement involve?
The CFPB found that Fifth Third placed and maintained duplicative force-placed collateral protection insurance on auto loans, charged premiums on terminated policies, provided inadequate payment notices, misrepresented cancellation timelines, and furnished inaccurate repossession data to credit bureaus. The program was discontinued in January 2019, and the Bank agreed to a $5 million penalty and redress for affected borrowers.
Could this settlement lead to more regulatory action?
The orders require ongoing compliance monitoring, periodic reporting, and board oversight, and the CFPB retains enforcement authority for any violations of the orders. The Bureau may also rely on these findings in future actions, so the settlement is not a complete shield against further regulatory scrutiny.

04—Continue

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