Notice: Following an internal review, the Bureau has concluded that the Taskforce on Federal Consumer Financial Law was subject to, and was not operated in compliance with, the Federal Advisory Committee Act. The Taskforce's final report therefore should not be relied upon as a product of a federal advisory committee that was established or operated in compliance with FACA.
WASHINGTON, D.C. – The Consumer Financial Protection Bureau (Bureau) Taskforce on Federal Consumer Financial Law (Taskforce) released a report today with recommendations on how to improve consumer protection in the financial marketplace. The Taskforce Report uses five interrelated principles that serve as the foundation for proposed systematic changes to the current legal and regulatory framework: consumer protection, information and education, competition and innovation, regulatory modernization and flexibility, and inclusion and access.
Chartered by the Bureau in January of 2020, the Taskforce has examined the existing legal and regulatory environment facing consumers and financial services providers. The Taskforce was in part inspired by the National Commission on Consumer Finance, which was established by the Consumer Credit Protection Act in 1968 to conduct original research and provide recommendations relating to the regulation of consumer credit. To help inform its work, the Taskforce engaged with external stakeholders, including consumer advocates, the Bureau’s combined advisory boards, state and federal regulators, and industry. The Taskforce’s report discusses what it learned during its examination and outreach to stakeholders and offers recommendations for the future of consumer financial protection.
“I want to thank Taskforce Chair Todd Zywicki and members Dr. Howard Beales, Dr. Thomas Durkin, Jean Noonan, and William MacLeod for applying their considerable expertise and experience in consumer protection to prepare an insightful report that will be incredibly valuable to policymakers,” said Consumer Financial Protection Bureau Director Kathleen L. Kraninger. “The Bureau is already committed to many of the recommended ideas presented in the report. The Taskforce recommendations help define and illuminate our current path.”
“On behalf of the Taskforce, I want to thank Director Kraninger, Deputy Director Tom Pahl, and the incredible staff of the CFPB for granting us the opportunity to serve the American consumer in this effort,” said Taskforce Chair Todd Zywicki. “We were animated by the goal of promoting a strong and vibrant system that will protect consumers from harm and enhance access and choice for all Americans. The COVID-19 pandemic highlights the need to provide greater financial regulatory flexibilities and accelerated the adoption of new financial technologies, which raise both new opportunities and new threats for consumers. By leveraging our combined 150 years of professional experience of seeking to improve the health of America’s financial system and the unique experiences and expertise inside and outside of the Bureau, we have created a document that will help provide guiding principles to advance the cause of consumer protection and inclusion for years to come.”
In its report, the Taskforce makes approximately 100 recommendations to the Bureau, Congress, and state and federal regulators to strengthen consumer protection. Among the Taskforce recommendations are the following (listed in no particular order):
- Authorize the Bureau to issue licenses to non-depository institutions that provide lending, money transmission, and payments services;
- 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;
- Research and develop policies to address problems of financial inclusion in rural communities;
- Facilitate creditor access to immigrants’ credit information prior to their arrival in the United States in order to use that information in credit decisions;
- Research consumer reporting issues that arise in connection with a consumer’s bankruptcy;
- Consider the benefits and costs of preempting state law where conflicts can impede the provision of valuable products and services, such as the regulation of FinTech companies engaged in money transmission;
- 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;
- Continue to increase dialogue with state regulators to bridge knowledge gaps and streamline regulation;
- Work with other agencies to create a unified regulatory regime for new and innovative technologies providing services similar to banks;
- Establish independent review of the Bureau’s regulatory cost-benefit analyses by staffing an office of cost-benefit analysis at the Bureau and or by submitting its analyses to OIRA for review;
- Evaluate any positive or negative effect on inclusion as part of the Bureau’s cost-benefit analyses as appropriate;
- Exercise caution (a recommendation for the Bureau, Congress, and other federal and state regulators) in restricting the use of nonfinancial alternative data, which can be very useful indicators of creditworthiness.
- Clarify the obligations of CRAs and furnishers with respect to disputes under the FCRA;
- Assess periodically the accuracy and completeness of consumer credit reports.
(Report links revised on January 14, 2022.)
The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.consumerfinance.gov.