Today marks 5 years since the establishment of the Consumer Financial Protection Bureau (CFPB). The CFPB continues to work steadfastly to protect consumers in the financial marketplace and to supervise companies for harmful and/or deceptive practices. In order to avoid regulatory compliance pitfalls, companies in consumer finance industries need to keep up with the CFPB’s guidelines.
Over the past five years, the CFPB has secured $11.7 billion in relief for more than 27 million harmed consumers and handled nearly one million consumer complaints submitted to their Consumer Complaint Database. (Check out our Risk Signal Report on trends in the CFPB Consumer Complaint Database.) They’ve carried out enforcement actions against companies in various industries, including debt-collection giants Encore Capital Group and Portfolio Recovery Associates and consumer financial services company Santander Bank, N.A.
To help consumers avoid harmful and deceptive financial practices, the CFPB created the consumer education program “Know Before You Owe,” a guide on how to shop smart for mortgages, student loans, auto loans, and other financial products. Armed with knowledge and a means to report harmful practices to the CFPB, consumers and the CFPB are working together to hold companies accountable for their actions.
So, what should companies expect next from this regulatory body?
- Consumer privacy and data security are taking on greater importance. Our COMPLY2016 panel “Meet the Regulators” discussed a CFPB enforcement action against Dwolla for misrepresenting its data security practices, as well as the CFPB’s stricter scrutiny of partners and service providers’ actions to ensure that their practices are compliant as well.
- New payday lending rules. Last month, the CFPB proposed a rule that would prevent payday lenders from lending money to consumers who would be unable to repay their loans without reborrowing and potentially falling into debt. Their proposed rule is informed by their report on payday loans, released last April.
- Enforcement of new mortgage rules. The CFPB finalized the “Know Before You Owe” mortgage disclosure rule and Ability-to-Repay rule to protect consumers from uninformed and dangerous lending practices. It’ll only be time before the CFPB carries out more enforcement actions against non-compliant mortgage lenders.
- New bans on arbitration clauses. The CFPB’s proposed ban would allow consumers to file or join class actions against consumer financial businesses. Companies need to prepare for more lawsuits and the expensive legal fees that come along with those.
The best way for businesses to help protect consumers and stay out of the CFPB’s sight is to keep up with regulatory developments and abide by their Responsible Business Conduct. Learn how your business can do so by checking out our 4 Must-Do’s to Meet the CFPB Code of Conduct.