In recent days much has been written and much has been said about the supervision and enforcement activities of the CFPB.  The election results have made some in the consumer finance industry hopeful that the excessive scrutiny of Bureau is going to let up in the future.  We do know that Congressional oversight, when applied, can rein in federal agencies.  Time will tell whether that comes to pass as a result of the 2014 mid-term elections.

Absent a major directional shift by the Bureau mandated by Congress, we have a pretty good picture of what to expect.  Consider these factors:

  • The Bureau has filed approximately 60 enforcement actions
  • Approximately $2.2 Billion in restitution has been achieved by enforcement actions
  • $174 Million in civil money penalties have been assessed
  • The Bureau still is in hot pursuit of the mortgage lending industry (including loan originator compensation and servicing). But, credit card providers are under increasing scrutiny as well
  • UDAAP is the favorite tool of the Bureau in pursuit of wrongdoing and wrongdoers
  • Credit reporting continues to constitute a large percentage of consumer complaints
  • Public comments by Director Cordray and Associate Director Petreus lead to the conclusion that we will see increased scrutiny of Student loans, Payday loans, and Military loans in 2015.

So, what is a consumer finance company to do?  Well, we continue to advise that the best defense in dealing with the CFPB is to continually evaluate one’s policies, procedures and practices to make certain that the company is operating in a manner that the Bureau and customers will find to be fair.

Dealing with the consumer public is not so simple or easy.  And, consumer financial transactions and products are by their nature deeply personal and important to the consumer.  As consumers, we take umbrage when we feel that we are taken advantage of or treated disrespectfully or unfairly.  So, examine the policies and procedures that most closely touch and concern customers to make sure that they are, in the first instance, in compliance with law, but also are fair, reasonable and understandable to customers.

Then, be in a position to document the company’s policies, practices and procedures.  Be able to show state and federal examiners that consumer law compliance is culturally imbedded in the company.  And, creating the position of Chief Compliance Officer with appropriately delegated authority is a really good place to start.