ARLINGTON, Va.—NAFCU has weighed in on the CFPB’s strategic plan for fiscal years 2022-2026.
The CFPB first issued its proposed strategic plan in December 2021, detailing four strategic goals that will be carried out by various objectives.
In its letter to the Bureau, NAFCU urged the CFPB to “initiate a rulemaking to define the ‘abusiveness’ standard, or, alternatively, reinstate its previous policy statement clarifying the standard.”
Regarding the bureau’s objective to focus on supervision and enforcement resources to those that pose the greatest harm to consumers, the association supports this focus, but points out that size of an institution does not equate to risk. The CFPB should instead, “divert supervision resources to those actors or products that cause the greatest harm to consumers and are in violation of federal consumer financial laws,” suggested NAFCU Senior Regulatory Affairs Counsel Kaley Schafer in the letter.
Schafer also encouraged the CFPB to remove or revise obsolete regulations to help credit unions deal with increased compliance burdens and increased compliance costs, which would allow them to focus more on serving their members.
“Revising and removing outdated and conflicting regulations may better align with industry practices and consumer expectations, while simultaneously ensuring consumer safety,” noted Schafer.
About Goal #2
Addressing the CFPB’s second goal, which is to empower consumers to live better financial lives with a focus on traditionally underserved people, Schafer noted NAFCU credit union members and the industry as a whole, already focus on helping underserved communities through financial literacy and education programs. NAFCU called on the CFPB to provide guidance or an advisory opinion on special purpose credit programs (SPCPs) focused on not-for-profit entities.
According to NAFCU, the Bureau can also empower consumers to live better financial lives through small-dollar lending.
“Often, credit unions offer short-term, small-dollar loans as a service to members with the associated fees solely covering the expenses of loan origination and servicing,” stated Schafer. “Regulations should be tailored to eradicate bad actors in the market without inhibiting credit unions’ ability to provide safe and affordable loans.”
NAFCU also provided suggestions on the CFPB’s goal to inform public policy with data-driven analysis on consumers’ experiences with financial institutions, products, and services, calling on the bureau to create a fair landscape between credit unions and fintechs or other companies offering financial services by providing more oversight and regulatory guidance on fintechs.
Additional Recommendations
The association also urged the CFPB to “ensure that P2P service providers are providing sufficient information for financial institutions to reasonably investigate alleged token errors, as described in the Bureau’s Fall 2021 Supervisory Highlight.”
The CFPB should also consider standards for ensuring that nonbank payment service providers are “responsive to credit union and other financial institution requests related to Regulation E investigations,” suggested Schafer. Adding that a structured regulatory framework would support coordination among all payment system participants.