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Explainer: How small businesses play a role in the rulemaking process

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We often hear many questions about how the rulemaking process works. We decided to write a series of posts that explain some key parts of the rulemaking process. We’ll add to the series in the coming weeks and months.

Before we propose a rule, we’re sometimes required to organize a Small Business Review Panel so that we can hear from small businesses about the potential impacts of the rule. We’re one of three federal regulators required to include the small business review process. Small businesses provide us with valuable feedback as we write regulations to help consumer financial products and services work for Americans.

How we work with small businesses

We’re a data-driven, evidence-based agency with a philosophy of issuing regulations only where there’s a strong justification for doing so. The Dodd-Frank Act, the law that created the CFPB, requires us to organize a Small Business Review Panel when we’re working on a rule that could have significant economic impacts on small entities. Small entities include small businesses, organizations, and small government bodies

Each Small Business Review Panel consists of representatives from the CFPB, Small Business Administration, and the Office of Management and Budget’s Office of Information and Regulatory Affairs. The panel holds an outreach meeting with a representative group of small businesses to discuss the potential rules we’re considering. We’ll use that feedback to inform the rulemaking process.

The panel decides which small businesses participate

First, we determine which types of small entities the proposed rule under consideration could directly affect. Then, we coordinate with the Small Business Administration to select individuals to represent these small entities. About 15 to 20 small business representatives usually participate in the process.

How the panel works

Before the outreach meeting, the panel will distribute materials to each participant, including general background, an overview of the proposals being considered, and a list of issues and questions we’ll discuss with the participants. We post these materials on our web site simultaneously so our rulemaking plans are transparent.

Small business representatives are given time to study the materials and we follow up with them to see if they have questions. Then, during the meeting, the panel hears from the representatives about the regulatory proposals. Representatives typically discuss the anticipated compliance requirements and potential costs of the proposed rule. In addition to providing verbal feedback during the meeting, the small business representatives may submit written comments.

Panel meetings

The panel’s meetings aren’t public, but we’ll publish meeting materials on our website. We want a free and open discussion with the small business representatives, and we think the best way to do that is to keep the meetings small. We’ll summarize our discussions in the panel report.

What happens next

Within 60 days of meeting, the panel will complete a report on the input we received from the small business representatives. The report may include any significant alternatives that would minimize economic impacts. We’ll publish the panel’s report along with a proposed rule, which is the next step in the rulemaking process. We’ll keep seeking feedback from consumers, consumer advocates, other regulators, and industry representatives that were not part of the panel process as we develop a proposed rule.

Your complaint is more than data—it’s your story

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Since we started accepting complaints in July 2011, we have handled more than 550,000 from people all over the country about problems in the financial marketplace. These complaints help us understand the problems you face and focus our efforts to protect consumers like you.

While you can see hundreds of thousands of these complaints in the Consumer Complaint Database, these complaints are much more than just data to us. These complaints reflect real and tough challenges people face every day as they try to navigate the financial world.

You’ve shared your story with us through your complaint before, but now we’re giving you the choice to publish your story in our Consumer Complaint Database. Sharing what happened to you with the public can help others see what’s happening in the financial marketplace.

Share your whole story, everyone will see it

When you submit a complaint to us, you tell us what happened. This is a space where you explain the circumstances, your frustrations, and your perspective on the problem. This is where you state your case using the dates and details of transactions and tell about your interactions with the company you are reporting. Beginning today, if you submit your complaint online you can choose to share your story on our Consumer Complaint Database , where anyone can come and see it.

Of course, we will review your narrative and remove any personal information to minimize the risk that the information could be used to identify you. If you decide not to share your story, we won’t make your story publicly available and it will not affect how we handle your complaint.

Later this year, you’ll start to see these narratives in our database. Making your story public will give more people, including you, the power to improve the financial marketplace.

Lifting your voice

The Consumer Complaint Database currently includes only some information about your situation, for example, the type of product you wrote to us about and what kind of action the company took to help. Now, with this new policy, your voice can explain the situation you are in and give the context surrounding your complaint. This will make it easier for anyone exploring our database to truly understand what happened.

Facing a problem with a financial product or service? Let us know. We’d like to hear about it!

Consumer advisory: 3 pension advance traps to avoid

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Many retirees depend on a pension to cover day-to-day as well as occasional unexpected expenses, such as health emergencies or home repairs. We’ve heard that some retirees with pensions who are facing financial challenges have responded to ads for cash advances on their pensions. Although pension advances may seem like a “quick fix” to your financial problems, they can eat into your retirement income when you start paying back the advance plus interest and fees.

A pension advance is a cash advance in exchange for a portion, or all, of your future pension payments. Pension advance companies typically charge high interest rates and fees and often target government retirees with pensions. Former servicemembers should also be on guard. Military retirees and veterans who receive monetary benefits from the Department of Veterans Affairs (VA) have been offered pension advances even though it’s illegal for lenders to take a military pension or veterans’ benefits. Many of those companies use patriotic-sounding names or logos and even claim they are endorsed by the VA as a way of enticing potential customers.

If you or a loved one is considering a pension advance, consider your alternatives. A financial coach or credit counselor can help you weigh your options and plan for new or unexpected financial demands. The National Foundation for Credit Counseling (NFCC) provides a list of member agencies around the country. You can also search for local credit counseling agencies on the Association of Independent Consumer Credit Counseling Agencies (AICCA)’s website.

Here are 3 things you can do to protect your retirement pension:

  1. Avoid loans with high fees and interest. Pension advance companies may not always advertise their fees and interest rates, but you will certainly feel them in your bottom line. Before you sign anything, learn what you are getting and how much you are giving up.
  2. Don’t sign over control of your benefits. Companies sometimes arrange for monthly payments to be automatically deposited in a newly created bank account so the company can withdraw payments, fees and interest charges from the account. This leaves you with little control.
  3. Don’t buy life insurance that you don’t want or need. Pension advance companies sometimes require consumers to sign up for life insurance with the company as the consumer’s beneficiary. If you sign up for life insurance with the pension advance company as your beneficiary, you could end up footing the bill, whether you know it or not.

You can also get a printer-friendly version of this information to share with friends or clients who are considering pension advances.

If you know someone who’s received a pension advance offer, we want to hear about their experiences, good and bad. Please ask them to share their story at consumerfinance.gov/your-story/.

Save the date, Richmond!

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Join us for a field hearing in Richmond, Va. on payday lending. The hearing will take place on Thursday, March 26 at 12 p.m. EDT. The event will be held at:

Greater Richmond Convention Center
Grand Ballroom BC, Level 2
403 N. Third St.
Richmond, Va. 23219

The hearing will feature remarks from Director Richard Cordray, as well as testimony from consumer groups, industry representatives, and members of the public.

This event is open to the public and requires an RSVP. Send us an email to RSVP. A live video will be streamed here on our blog.

If you need an accommodation to participate, you can make a request.

See you there!

Updated on March 20, 2015 to include the venue location.

Here’s why you should open a savings account for your kids

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Youth savings

Even a small savings account for your child could make a powerful difference in their future.

A recent study shows that children from low- or-moderate-income families, who have a savings account for college, are three times more likely to go to college, and four times more likely to graduate college—even if the account holds less than $500.

Parents often want to open accounts for their children, to help them learn about saving for the future and managing their money. And young people often go to a bank to open an account when they get their first job and start earning money.

However, when trying to open an account for a child under age 18, some people run into roadblocks.

Whose name should the account be in? Who has to sign for it? Questions like these can be hard for the young person, the parent or caregiver, and even for the bank or credit union. This could mean that some children and teenagers are missing out on this important way to build their financial future.

Clarifying the rules

To help, federal banking regulators have issued guidance for banks and credit unions when they’re asked to open savings accounts for children under age 18.

For parents, this means:

  • Youth savings accounts are protected by the same federal consumer protection laws and regulations as other accounts.
  • More schools may be working with local financial institutions to provide financial education and opportunities for children to open accounts. The new guidance explains the federal rules on when accounts can be opened at school.
  • Some states may not allow minors to open their own accounts. However, a parent can still open an account for the child and can consider putting both names on the account.

Teaching kids about money and saving

Financial skills are important in life and getting kids started early with good financial habits and savings can make a big impact on their financial futures. We’ve got some answers to your questions about teaching kids the money basics and ideas for how to get started.

The CFPB blog aims to facilitate conversations about our work. We want your comments to drive this conversation. Please be courteous, constructive, and on-topic. To help make the conversation productive, we encourage you to read our comment policy before posting. Comments on any post remain open for seven days from the date it was posted.