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New consumer protections on the horizon

Feb 25, 2021
By: Nick Bonnema
Financial Institutions

In January 2020, the Consumer Financial Protection Bureau (CFPB) chartered the Taskforce on Federal Consumer Financial Law to examine the existing legal and regulatory environment facing consumers and financial service providers and to make appropriate recommendations.

While January 2020 may feel like a decade ago, the taskforce recently released its report, and its guidance is focused on how consumer protections can be enhanced and how the regulatory environment can be better aligned with the modern world.

After a year of financial institutions changing their interactions with customers and employees, and COVID-19 related scams and schemes spreading throughout the banking system, this guidance is particularly timely.

While the taskforce recommendations do not carry the force of law or establish new regulatory expectations, they may provide a blueprint for Congress and state and federal regulators moving into the future. In looking at these close to 100 recommendations, you may also find new ways to give your financial institution a competitive edge and provide your customers further financial security.

A few of those recommendations are below:

  • 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.
  • Work with other agencies to create a unified regulatory regime for new and innovative technologies providing services similar to banks.
  • Research and develop policies to address problems of financial inclusion in rural communities.
  • 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.
  • The Federal Reserve and the Bureau should take all reasonable measures to speed up the payments clearance system by updating Regulation CC on expedited funds availability as appropriate to reflect improvements in the technology for faster check clearing.
  • The Federal Reserve should maintain the recent interim final rule amending Regulation D to the six-transactions-per-statement cycle limit for savings accounts.
  • The Bureau should focus its supervision activity on financial institution compliance with the consumer protection laws. The institution’s exam rating should be based not on the quality of its CMS but on the outcome of its CMS — that is, its compliance and compliance failures. Unless otherwise necessitated by laws that require the presence of a CMS, the Bureau should limit CMS considerations to risk assessments in setting exam scope and focus.

Volume I of the taskforce’s report provides a historical and economic overview of consumer finance, describes the framework of consumer financial protection. and speaks to the modernization of the regulatory framework. It can be found here: https://files.consumerfinance.gov/f/documents/cfpb_taskforce-federal-consumer-financial-law_report-volume-1_2021-01.pdf

Volume II contains the recommendations, and it can be found here: https://files.consumerfinance.gov/f/documents/cfpb_taskforce-federal-consumer-financial-law_report-volume-2_2021-01.pdf

As we continue throughout the year, it is important to remain on top of financial institution regulations and prepare for all that 2021 has to offer. If you need help keeping up to date on or implementing new regulations, contact Wipfli for assistance.

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Nick Bonnema, JD, CRCM
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