FALL 2017 STATEMENT OF REGULATORY PRIORITIES
CFPB Purposes and Functions
The Bureau of Consumer Financial Protection (CFPB or Bureau) was established in 2010 as an independent bureau of the Federal Reserve System by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111-203, 124 Stat. 1376) (Dodd-Frank Act). Pursuant to the Dodd-Frank Act, the CFPB has rulemaking, supervisory, enforcement, and other authorities relating to consumer financial products and services. Among these are the consumer financial protection authorities that transferred to the CFPB from seven Federal agencies on the designated transfer date, July 21, 2011. These authorities include the ability to issue regulations under more than a dozen Federal consumer financial laws.
As provided in section 1021 of the Dodd-Frank Act, the purpose of the CFPB is to implement and enforce Federal consumer financial laws consistently for the purpose of ensuring that all consumers have access to markets for consumer financial products and services and that such markets are fair, transparent, and competitive. The CFPB is authorized to exercise its authorities for the purpose of ensuring that, with respect to consumer financial products and services:
(1) Consumers are provided with timely and understandable information to make responsible decisions about financial transactions;
(2) Consumers are protected from unfair, deceptive, or abusive acts and practices and from discrimination;
(3) Outdated, unnecessary, or unduly burdensome regulations are regularly identified and addressed in order to reduce unwarranted regulatory burdens;
(4) Federal consumer financial law is enforced consistently, without regard to status of a person as a depository institution, in order to promote fair competition; and
(5) Markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation.
CFPB Regulatory Priorities
The CFPB's regulatory priorities for the period from November 1, 2017, to October 31, 2018, include continuing rulemaking activities to (1) Implement statutory directives; (2) address market failures, facilitate fair competition among financial service providers, and improve consumer understanding; and (3) modernize, clarify, and streamline consumer financial regulations to reduce unwarranted regulatory burdens.
Bureau Regulatory Efforts to Implement Statutory Directives
Much of the Bureau's rulemaking work is focusing on implementing directives mandated in the Dodd-Frank Act and other statutes. As part of these rulemakings, the Bureau is working to achieve the consumer protection objectives of the statutes while minimizing regulatory burden on financial services providers and facilitating a smooth implementation process for both industry and consumers
For example, the Bureau is continuing efforts to facilitate implementation of critical consumer protections under the Dodd-Frank Act that guard against mortgage market practices that contributed to the nation's most significant financial crisis in several decades. Since 2013, the Bureau has issued regulations as directed by the Dodd-Frank Act to implement certain protections for mortgage originations and servicing, integrate various Federal mortgage disclosures, and amend mortgage reporting requirements under the Home Mortgage Disclosure Act (HMDA). The Bureau is conducting follow-up rulemakings as warranted to address issues that have arisen during the implementation process for these rules and to provide greater clarification and certainty to financial services providers. As discussed below, the Bureau has begun the preparation of reports assessing significant rules implementing provisions of the Dodd-Frank Act.
The Bureau is also working to implement section 1071 of the Dodd-Frank Act, which amends ECOA to require financial institutions to report information concerning credit applications made by women-owned, minority-owned, and small businesses. This rulemaking could provide critical information about how these businesses - which are critical engines for economic growth - access credit. The Bureau held a public hearing on this subject in spring 2017, and released a white paper summarizing preliminary research on the small business lending market. In May 2017, the Bureau also issued a Request for Information seeking public comment on, among other things, the types of credit products offered and the types of data currently collected by lenders in this market and the potential complexity, cost of, and privacy issues related to, small business data collection. The information received will help the Bureau determine how to implement the rule effectively and minimize burdens on lenders.
Addressing Market Failures, Facilitating Fair Competition Among Financial Services Providers, and Improving Consumer Understanding
The Bureau is considering rules in places where there are substantial market failures that make it difficult for consumers to engage in informed decision making and otherwise protect their own interests. In addition, the Dodd-Frank Act directs the Bureau to focus on activities that promote fair competition among financial services providers, which itself has substantial benefits for consumers.
For example, the Bureau released a Notice of Proposed Rulemaking in June 2016, building on several years of research documenting consumer harms from practices related to payday loans, auto title loans, and other similar credit products. In particular, the Bureau is concerned that product structure, lack of underwriting, and certain other lender practices are interfering with consumer decision making with regard to such products and trapping large numbers of consumers in extended cycles of debt that they do not expect. The Bureau is also concerned that certain lenders' payment collection practices are causing substantial harm to consumers, including substantial unexpected fees and heightened risk of losing their checking accounts. The Bureau received more than one million comments in response to the proposal and is carefully considering how best to address concerns raised in the proposal in a manner consistent with the Bureau's objectives under the Dodd-Frank Act.
The Bureau is also engaged in rulemaking activities regarding the debt collection market, which continues to be a top source of complaints to the Bureau. The Bureau is concerned that, because consumers cannot choose their debt collectors or "vote with their feet," consumers have less ability to protect themselves from harmful practices. In January 2017, the Bureau published the results of a survey of consumers about their experiences with debt collection. The Bureau has also received encouragement from industry to engage in rulemaking to resolve conflicts in case law and address issues of concern under the Fair Debt Collection Practices Act (FDCPA), such as the application of the 40-year-old statute to modern communication technologies. The Bureau released an outline of proposals under consideration in July 2016, concerning practices by companies that are "debt collectors" under the FDCPA, in advance of convening a panel under the Small Business Regulatory Enforcement Fairness Act (SBREFA) in conjunction with the Office of Management and Budget and the Small Business Administration's Chief Counsel for Advocacy to consult with representatives of small businesses that might be affected by the rulemaking. The Bureau expects to release a proposed rule in late 2017 concerning FDCPA collectors' communications practices and consumer disclosures. The Bureau intends to follow up separately at a later time about concerns regarding information flows between creditors and FDCPA collectors and about potential rules to govern creditors that collect their own debts.
The Bureau is also engaged in policy analysis and further research initiatives in preparation for a potential rulemaking regarding overdraft programs on checking accounts. After several years of research, the Bureau believes that there are consumer protection concerns with regard to these programs. Consumers do not shop based on overdraft fee amounts and policies, and the market for overdraft services does not appear to be competitive. Under the current regulatory regime consumers can opt in to permit their financial institution to charge fees for ATM and point-of-sale debit overdrafts, but the complexity of the system may complicate consumer decision making. Despite widespread use of disclosure forms, the regime produces substantially different opt-in rates across different depository institutions and the Bureau's supervisory and enforcement work indicates that some institutions are aggressively steering consumers to opt in. The CFPB is engaged in consumer testing of revised opt-in forms and considering whether other regulatory changes may be warranted to enhance consumer decision making.
In addition, the Bureau is continuing rulemaking activities that will ensure meaningful supervision of non-bank financial services providers in order to create a more level playing field for depository and non-depository institutions. Under section 1024 of the Dodd-Frank Act, the CFPB is authorized to supervise "larger participants" of markets for various consumer financial products and services as defined by Bureau rule. The Bureau has defined the threshold for larger participants in several markets in past rulemakings, and is now working to develop a proposed rule that would define non-bank "larger participants" in the market for personal loans, including consumer installment loans and vehicle title loans. The Bureau is also considering whether rules to require registration of these or other non-depository lenders would facilitate supervision, as has been suggested to the Bureau by both consumer advocates and industry groups.
The Bureau's October 2016, rulemaking concerning prepaid financial products also advanced fairness and consistency objectives by creating a uniform disclosure regime and providing basic protections similar to those enjoyed by users of debit cards and credit cards. In April 2017, the Bureau extended the general effective date of the rule to April 1, 2018. In June 2017, the Bureau issued a proposal that would make targeted changes to the 2016 prepaid rule to reduce implementation and compliance burdens on the industry and ensure consumer understanding of and access to these products. The Bureau expects to issue a final rule in fall 2017.
Modernizing, Streamlining, and Clarifying Consumer Financial Regulations
The Bureau's third group of activities concerns modernizing, streamlining, and clarifying consumer financial regulations and other activities to reduce unwarranted regulatory burden and facilitate consumer-friendly innovation and increased access to consumer financial markets as directed by the Dodd-Frank Act. Since most of the Federal consumer financial laws that the Bureau administers were enacted in the 1960s and 1970s, there is often substantial demand for these activities from both industry and consumer advocates alike.
The Bureau is also beginning work this fall on the first in a series of reviews of existing regulations that it inherited from other agencies through the transfer of authorities under the Dodd-Frank Act. The Bureau had previously sought feedback on the inherited rules as a whole, and identified and executed burden reduction projects from that undertaking. The Bureau has largely completed those initial projects and believes that the next logical step is to review individual regulations-or portions of large regulations-in more detail to identify opportunities to clarify ambiguities, address developments in the marketplace, or modernize or streamline provisions. The Bureau notes that other Federal financial services regulators have engaged in these types of reviews over time and believes that such an initiative would be a natural complement to its work to facilitate implementation of new regulations.
For its first review, the Bureau expects to focus primarily on Subparts B and G of Regulation Z, which implement TILA with respect to open-end credit generally and credit cards in particular. As part of this general effort, the Bureau is considering rules to modernize the Bureau's database of credit card agreements to reduce burden on issuers that submit credit card agreements to the Bureau and make the database more useful for consumers and the general public. The Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) requires credit card issuers to post their credit card agreements to their Internet site, and submit those agreements to the Bureau to be posted on an Internet site maintained by the Bureau. The Bureau believes an improved submission process and database would be more efficient for both industry and the Bureau and would allow consumers and the general public to access and analyze information more easily.
In addition to these rulemaking activities noted in the Unified Agenda, the Bureau is conducting other activities to modernize, streamline, and clarify consumer financial regulatory activities. For example, section 1022(d) of the Dodd-Frank Act specifically directs the Bureau to assess the effectiveness of significant rules five years after they are implemented, including seeking public comment. The Bureau has sought public comment on three significant rules: the remittance rule, the ability to repay rule, and the RESPA mortgage servicing rule. The Bureau is currently reviewing those comments as part of its work to develop the reports mandated by section 1022(d) of the Dodd-Frank Act. The findings in these reports will help the Bureau and the public evaluate the recommendations the Bureau received and inform the Bureau's decisions whether adjustments to rules are warranted. The Bureau has also added items to its long-term regulatory agenda, including a potential rulemaking to modernize Regulation E, which implements the Electronic Fund Transfer Act (EFTA), and to address issues of concern in connection with data aggregators, either under existing regulatory regimes such as EFTA and the Fair Credit Reporting Act (FCRA) or under the Dodd-Frank Act more generally. The Bureau believes that technological and market developments may warrant rulemaking under EFTA and FCRA to clarify the application of existing statutes and regulations, modernize and streamline those laws, and address emerging consumer protection concerns. The Bureau continues to look at other methods of modernizing, streamlining, and clarifying its regulations, consistent with the goal of reducing overall regulatory burden.