Recommendations to CFPB, as well as Congress and federal and state regulators, focus on consumer protection and regulatory certainty. Editor’s note: This article is available for members only.
1/6/2021 8:00
The Consumer Financial Protection Bureau Taskforce on Federal Consumer Financial Law released a two-part report Tuesday with recommendations for consumer protection and regulatory certainty.
“We are committed to providing financial institutions … with regulatory certainty,” said CFPB Director Kathy Kraninger in her opening remarks during an online presentation to cover the highlights of the report with members of the task force a year after it was established.
“Recommendations were to take the form of referrals to Congress for legislative action, suggestions for changes to existing regulations, writing of new regulations, ideas for new systems of coordination between federal regulators, promotion of new federal-state working relationships, or identification of subjects in need of further research,” Kraninger said.
The report consists of approximately 100 recommendations to the bureau, Congress and state and federal regulators, including recommendations that reflect preventing regulation by enforcement, Kraninger said.
The task force’s report “uses five interrelated principles that serve as the foundation for proposed systematic changes to the current legal and regulatory framework: consumer protection, information and education, competition and innovation, regulatory modernization and flexibility, and inclusion and access,” according to a news release from the CFPB.
Since January 2020, “the task force has examined the existing legal and regulatory environment facing consumers and financial services providers. To help inform its work, the task force engaged with external stakeholders, including consumer advocates, the bureau’s combined advisory boards, state and federal regulators, and industry. The task force’s report discusses what it learned during its examination and outreach to stakeholders and offers recommendations for the future of consumer financial protection,” according to the news release.
The five-member task force includes representation from attorneys, former regulators and academic leaders.
Jean Noonan, a partner at Hudson Cook in Washington, D.C., which has an ACA International member office in Maryland, serves on the task force.
Chair of the task force, Todd J. Zywicki, professor of law at George Mason University (GMU) Antonin Scalia Law School, senior fellow of the Cato Institute, and former executive director of the GMU Law and Economics Center, presented the themes covered by the task force in the report during Tuesday’s event:
- Inclusion and access in the financial system and regulatory barriers that might be obstacles to greater financial inclusion;
- Financial harm, including minimizing consumer harm and maximizing consumer welfare, and;
- Modernizing the consumer financial protection system.
The task force’s recommendations, in no particular order, according to the CFPB, include:
- Authorize the bureau to issue licenses to non-depository institutions that provide lending, money transmission, and payments services;
- Expand access to the payment system by unbanked and underbanked consumers and ensure consistent treatment by applying the same rules to similar financial products;
- Identify competitive barriers and make appropriate recommendations to policymakers and regulators for expanding access to the payments systems by non-bank providers;
- Research and develop policies tailored to the unique challenges of formerly incarcerated people, and work with state and federal authorities to improve protection of this population;
- Research and develop policies to address problems of financial inclusion in rural communities;
- Facilitate creditor access to immigrants’ credit information prior to their arrival in the United States in order to use that information in credit decisions;
- Research consumer reporting issues that arise in connection with a consumer’s bankruptcy;
- Consider the benefits and costs of preempting state law where conflicts can impede the provision of valuable products and services, such as the regulation of FinTech companies engaged in money transmission;
- Identify opportunities to coordinate regulatory efforts. For example, the bureau and prudential regulators should eliminate overlapping examination subject areas and reconcile inconsistent examination standards that unnecessarily expend multiple resources and can cause confusion;
- Continue to increase dialogue with state regulators to bridge knowledge gaps and streamline regulation;
- Work with other agencies to create a unified regulatory regime for new and innovative technologies providing services similar to banks;
- Establish independent review of the Bureau’s regulatory cost-benefit analyses by staffing an office of cost-benefit analysis at the Bureau and or by submitting its analyses to OIRA for review;
- Evaluate any positive or negative effect on inclusion as part of the bureau’s cost-benefit analyses as appropriate;
- Exercise caution (a recommendation for the bureau, Congress, and other federal and state regulators) in restricting the use of nonfinancial alternative data, which can be very useful indicators of creditworthiness.
- Clarify the obligations of CRAs and furnishers with respect to disputes under the Fair Credit Reporting Act;
- Assess periodically the accuracy and completeness of consumer credit reports.
Volume one of the report is available here and volume two focused on recommendations is available here.
ACA is continuing to review for future coverage of the report and Zywicki will also provide an update for ACA members at the Committee of 100 meeting in February.