The Consumer Financial Protection Bureau (CFPB) announced in a Monday (May 16) blog post that it is launching a new initiative to ensure that other agencies with consumer financial protection responsibilities apply the rules in a consistent manner. The CFPB will issue Consumer Financial Protection Circulars to government agencies and other enforcers where it will explain how the CFPB intends to enforce federal consumer financial law.
The CFPB is the principal regulator responsible for administering the federal consumer financial laws, including the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Consumer Financial Protection Act and others. However, the CFPB is not the only enforcer of these laws. Enforcement responsibility is spread among a large set of state and federal government agencies.
The CFPB is concerned that given the broad variety of agencies responsible for enforcing federal consumer financial law, there is a risk that companies might encounter inconsistent enforcement strategies and approaches. “Consistency is also imperative to creating a level playing field between companies that compete in the same market but are subject to the jurisdiction of different enforcers,” CFPB Director Rohit Chopra said in the blog post.
The enforcers of federal consumer financial law include, most notably, state attorneys general and state regulators, as well as federal financial regulators such as the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System and the National Credit Union Administration. Some federal consumer financial laws are also enforceable by other federal agencies, including the Department of Justice and the Federal Trade Commission.
The agency also noted that it is “beginning to identify” a number of issues that would benefit from more consistent enforcement, but it stopped short of saying which areas. According to the blog, the circulars will be policy statements under the Administrative Procedure Act, and they will provide background information about applicable law. However, they will also state considerations relevant to the CFPB’s exercise of its authorities and advice other parties with authority how to enforce federal consumer financial law.
To avoid any misinterpretation, the bureau explains that these circulars won’t restrict the agency’s exercise of its authority, impose any legal requirements on external parties or create or confer any rights that could be enforceable in administrative or civil proceedings.
CFPB’s New Hiring
The CFPB has recently launched several market consultations and requests for information that could lead to enforcement and other actions by the regulator, as the initial letters sent to the companies revealed. Big Tech companies, buy now, pay later (BNPL) providers, credit card firms and banks are all under the agency’s radar. Last week, the CFPB announced it is expanding its enforcement office by 20 full-time positions as the agency looks to bring more expertise in-house. The CFPB Office of Enforcement received authorization to hire the additional staff, most of whom will be attorneys, according to an agency spokesperson.
During his testimony before the Senate Banking Committee on April 26, Chopra highlighted the damage caused by repeat offenders, suggesting that more should be expected from the CFPB in this area.
This is not the first time that Chopra urged regulators and enforcers to step up their game against repeat offenders and, in particular, against large financial institutions.
In March 28, during a speech at the University of Pennsylvania, he criticized how big financial companies managed to escape unscathed from wrongdoings, and how regulators were happy to settle most of these cases with big fines that hit the headlines, but ultimately did little to change the company’s behavior.
Chopra also advanced that the agency had plans to establish a dedicated unit in the enforcement division to enhance detection of repeat offenders. Thus, some of the 20 new officials could be assigned to supervise repeat offenders.