(a) General rules.
(1) Voluntary
self-testing and correction. The report or results of a self-test
that a creditor voluntarily conducts (or authorizes) are privileged
as provided in this section. Data collection required by law or by
any governmental authority is not a voluntary self-test.
(2) Corrective action required. The privilege in this section applies
only if the creditor has taken or is taking appropriate corrective
action.
(3) Other privileges. The privilege created
by this section does not preclude the assertion of any other privilege
that may also apply.
6-5065.1
(b) Self-test defined.
(1) Definition. A self-test is any program, practice, or study that:
(i) Is designed
and used specifically to determine the extent or effectiveness of
a creditor’s compliance with the Act or this part; and
(ii) Creates data or factual
information that is not available and cannot be derived from loan
or application files or other records related to credit transactions.
(2) Types of information privileged. The privilege
under this section applies to the report or results of the self-test,
data or factual information created by the self-test, and any analysis,
opinions, and conclusions pertaining to the self-test report or results.
The privilege covers workpapers or draft documents as well as final
documents.
(3) Types of information not privileged. The
privilege under this section does not apply to:
(i) Information
about whether a creditor conducted a self-test, the methodology used
or the scope of the self-test, the time period covered by the self-test,
or the dates it was conducted; or
(ii) Loan and application files or other
business records related to credit transactions, and information derived
from such files and records, even if the information has been aggregated,
summarized, or reorganized to facilitate analysis.
6-5065.2
(c) Appropriate corrective
action.
(1) General requirement. For the privilege in this section to apply, appropriate corrective
action is required when the self-test shows that it is more likely
than not that a violation occurred, even though no violation has been
formally adjudicated.
(2) Determining the scope of appropriate
corrective action. A creditor must take corrective action that
is reasonably likely to remedy the cause and effect of a likely violation
by:
(i) Identifying the policies or practices
that are the likely cause of the violation; and
(ii) Assessing the extent and scope
of any violation.
(3) Types of
relief. Appropriate corrective action may include both prospective
and remedial relief, except that to establish a privilege under this
section:
(i) A creditor is not required to provide
remedial relief to a tester used in a self-test;
(ii) A creditor is only required to
provide remedial relief to an applicant identified by the self-test
as one whose rights were more likely than not violated; and
(iii) A creditor is not
required to provide remedial relief to a particular applicant if the
statute of limitations applicable to the violation expired before
the creditor obtained the results of the self-test or the applicant
is otherwise ineligible for such relief.
(4) No admission
of violation. Taking corrective action is not an admission that
a violation occurred.
6-5065.3
(d) Scope of privilege.
(1) General rule. The report or results of a privileged self-test may not be obtained
or used:
(i) By a government agency in any examination
or investigation relating to compliance with the Act or this part;
or
(ii) By a government
agency or an applicant (including a prospective applicant who alleges
a violation of section 1002.4(b)) in any proceeding or civil action
in which a violation of the Act or this part is alleged.
(2) Loss of privilege. The report or results
of a self-test are not privileged under paragraph (d)(1) of this section
if the creditor or a person with lawful access to the report or results:
(i) Voluntarily discloses any part of the report or results, or any
other information privileged under this section, to an applicant or
government agency or to the public;
(ii) Discloses any part of the report
or results, or any other information privileged under this section,
as a defense to charges that the creditor has violated the Act or
regulation; or
(iii)
Fails or is unable to produce written or recorded information about
the self-test that is required to be retained under section 1002.12(b)(6)
when the information is needed to determine whether the privilege
applies. This paragraph does not limit any other penalty or remedy
that may be available for a violation of section 1002.12.
(3) Limited use of privileged information. Notwithstanding
paragraph (d)(1) of this section, the self-test report or results
and any other information privileged under this section may be obtained
and used by an applicant or government agency solely to determine
a penalty or remedy after a violation of the Act or this part has
been adjudicated or admitted. Disclosures for this limited purpose
may be used only for the particular proceeding in which the adjudication
or admission was made. Information disclosed under this paragraph
(d)(3) remains privileged under paragraph (d)(1) of this section.
