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Promoting competition in our financial markets

A year ago, the President issued an executive order to launch a whole-of-government effort to promote competition in the American economy. When families and businesses face limited choices, they can encounter higher prices and worse customer service.

Congress has charged the CFPB with ensuring that markets for consumer financial products are competitive, so the CFPB is participating in this whole-of-government effort, along with other independent agencies. Over the last year, the CFPB has taken a number of steps to promote competition in our markets.

First, the CFPB is working to identify the obstacles for consumers to refinance or switch providers more easily. For example, we have asked the nation’s largest credit card issuers about a change that occurred across the industry that is undermining the ability for consumers to get lower-rate offers from competitors. We are also identifying impediments to refinancing in other markets, including mortgages and auto. The CFPB is also accelerating its work to implement a required rulemaking on personal financial data rights, which we hope will spur competition and switching by giving consumers more control of their data.

Second, we have launched an initiative to save families billions of dollars in junk fees. These back-end fees undermine fair competition by obscuring the all-in cost of a product or service. Tens of thousands of Americans have submitted feedback on this work, and many financial institutions are responding by cutting or eliminating fees altogether, including billions of dollars in overdraft and NSF fees. We issued a legal interpretation affirming that federal law often prohibits debt collectors from charging “pay-to-pay” fees, which will help to ensure law-abiding debt collectors aren’t disadvantaged by those that impose unlawful fees. We have also started a rulemaking process to address credit card late fees that cost Americans $12 billion in 2020 alone.

Third, the CFPB is looking to identify the roadblocks that small financial institutions and new entrants face when challenging dominant players. With the arrival of Big Tech into payments and banking, we have ordered many of these giants to turn over information about their practices and plans on their payment systems. The information will help the CFPB shed light on how they will decide who they kick off their platform and how they will use the data of individual consumers and any competing businesses. In addition, we are working with community banks to understand the impacts of the highly concentrated core service provider market. These platforms can limit flexibility and raise costs for many small financial institutions seeking to fairly compete.

There is much more work to be done. With the help of our newly established office focused on this work, we will continue to develop policy to make sure that families and businesses benefit from fierce competition in financial services.

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