WASHINGTON – The CFPB’s Taskforce on Federal Consumer Financial Law has released a report with recommendations on how to improve consumer protection in the financial marketplace—including that credit unions be given expanded authority to serve underserved areas and that non-depository institutions, such as fintechs, be issued licenses.
According to the CFPB, the Taskforce 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.”
Prior to its release, CFPB Deputy Director Tom Pahl discussed the report and the taskforce’s recommendations during a call with CUNA President/CEO Jim Nussle.
CUNA comments to the taskforce in June 2020, urging it to, “look closely at the outsized impact that the Bureau’s rules have had on credit unions as community-based financial institutions and to recommend the Bureau streamline regulations with an eye toward improving the financial health and well-being of consumers.”
Chartered by the Bureau in January of 2020, the Taskforce has examined the existing legal and regulatory environment facing consumers and financial services providers, the CFPB said. The CFPB said the Taskforce engaged with external stakeholders, including consumer advocates, the Bureau’s combined advisory boards, state and federal regulators, and industry, to create the report.
The Recommendations
In its report, the Taskforce makes approximately 100 recommendations to the Bureau, Congress, and state and federal regulators to strengthen consumer protection.
Among the recommendations in the report:
- 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 FCRA
- Assess periodically the accuracy and completeness of consumer credit reports
To read the Taskforce Report Volume I click here.
To read the Taskforce Report Volume II click here.