ACA submitted a letter to the bill’s sponsor, U.S. Rep. Andy Barr, highlighting the importance of the legislation’s requirements for regulatory cost-benefit analysis and clarity on how the CFPB uses its UDAAP authority.
12/27/2023 12:30 P.M.
2 minute read
In a letter (PDF) to Capitol Hill this week, ACA International advocated on behalf of members to support a bill from U.S. Rep. Andy Barr, R-Ky., that would reform unfair, deceptive, or abusive acts or practices (UDAAP) authority granted to the Consumer Financial Protection Bureau and clarify standards for UDAAP enforcement actions.
“Since the Dodd-Frank Act passed, financial institutions and providers have been left without clarity of the definition for the term ‘abusive,’ and inadequate guidance from CFPB on what would constitute a UDAAP violation. Regulatory uncertainty leads to fewer choices and higher prices for consumers, and the agency tasked with protecting consumers should not be complicit in regulation that is causing these outcomes,” Barr said in a news release. “My legislation, the Rectifying Undefined Definitions of Abusive Acts or Practices or the Rectifying UDAAP Act, requires the CFPB to provide the transparency financial institutions need to serve consumers and ensure there is ample access to credit in our consumer markets.”
Barr initially announced he would introduce the legislation during a House Financial Services Committee hearing with CFPB Director Rohit Chopra in November 2023.
The CFPB issued a policy statement on UDAAP in April 2023 to outline the prohibition of “abusive conduct” in consumer financial markets and a framework for federal and state regulators to identify such conduct, ACA International previously reported.
ACA supports the legislation’s requirement to clarify the definition of “abusive” used by the CFPB, which has recently been further complicated by the bureau’s policy statement and other guidance.
“Furthermore, the legislation’s requirement for regulatory cost-benefit analysis would help ensure that the CFPB’s actions do not do more harm than good and fulfill the need for regulators to evaluate consequences of actions in the marketplace,” said ACA CEO Scott Purcell in the letter. “Additionally, the bill’s section providing an opportunity to cure would be a tremendous step forward in allowing stakeholders to self-identify compliance issues and address them without fear of public shaming or retribution. These changes, in addition to many other important aspects of your legislation, would create clear rules of the road that benefit both consumers and stakeholders. It would have the effect of rewarding robust compliance measures, rather than focusing efforts on seeking a needle in a haystack to tarnish industry.”
A summary of Barr’s bill, H.R. 6789, is pending.
Related Content from ACA International:
Legislation Seeks Reform of CFPB’s UDAAP Enforcement Actions
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