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Discover completes student loan research

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A quick dive:

  • Discover Financial Services announced today that its own internal investigation into its student loan servicing practices and related compliance issues concluded that according to the document with the Securities and Exchange Commission.
  • However, the Riverwood, Illinois-based card company “continues to communicate with its regulatory oversight staff” about the investigation, “and it may be subject to reviews, investigations, proceedings or other actions” related to student loan servicing, in filing said.
  • Discover disclosed the probe in July, causing a flurry of questions from the analysts of the time. A “board-appointed independent ad hoc committee” oversaw the probe, the company said in today’s filing.

Dive Insight:

A spokesman for Discover did not immediately respond to requests for additional comment beyond a brief statement.

In 2015, the Consumer Financial Protection Bureau issued a Consent Order alleging that you misrepresented the minimum amounts owed on your student loan statements, misrepresented tax information needed to receive certain tax credits, and engaged in illegal debt collection . In December 2020, Discover signed another consent order with the Consumer Financial Protection Bureau and agreed to pay $35 million after the company violated the previous order.

Companies latest quarterly report with the Securities and Exchange Commission noted that some of its subsidiaries are subject to a CFPB consent order “with respect to certain private student loan servicing practices.”

The press secretary of the CFPB informed the agency about this today “Can neither confirm nor deny the existence of any surveillance or enforcement work as this information is confidential.”

Earlier this year, the company said it was suspending a share buyback program in light of the investigation. As a result of the investigation, Discover said in a statement that it would resume share buybacks. Through its existing buyback program, the company has authorized share buybacks of up to $4.2 billion through June 30, 2023, according to the filing.

This was announced by the company’s financial director, John Green, in July took a “conservative approach” in suspending the buyback program because it “became a securities law matter” related to the investigation. During the campaign Art earnings report for the third quarter on October 25Discover executives said the investigation into the student loan scandal is not yet complete, but Green and CEO Roger Hochschild there were hopes that the resumption of the share buyback program would take place in the fourth quarter.

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