Over the last year, the CFPB has been especially active in the consumer finance industry, and we anticipate even more activity this year. In our CFPB2016 series, we look to 2016 and what we expect out of and with respect to the CFPB. This week, we look at what is on the agency's upcoming regulatory agenda.
When President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and created the CFPB, it became clear that the consumer finance industry would be subject to unprecedented federal regulation. The question was not if, but when. Looking back on the last year, the answer to when (or at least the beginning of when) appears to be 2015.
Frequent readers of our blog know that 2015 was a big year for the CFPB and the consumer finance industry. The CFPB addressed consumer arbitration, small-dollar lending, along with an increased emphasis on consumer complaints and Unfair, Deceptive or Abusive Acts or Practices (UDAAP). And, of course, the CFPB continues to aggressively use its enforcement authority—measuring its scorecard in billions of dollars.
It looks like 2016 may be even bigger. In today's post, we look at the CFPB's upcoming agenda and what the consumer finance industry should anticipate over the next 12 months:
- Arbitration – As referenced above, the CFPB began seriously addressing mandatory consumer arbitration with a study released in March 2015 and an outline of proposals in October 2015. The CFPB is now in the initial phases of the rulemaking process.
- Small-Dollar Lending Regulation – In March 2015, the CFPB released its outline of proposals addressing certain small dollar loans, including almost all payday loans and many installment loans. Over the last nine months, the agency has been working with both consumer and industry groups to develop a rulemaking proposal that will likely be released in first quarter 2016 (possibly as early as next month).
- Larger Participant Rule – The Dodd Frank Act gives the CFPB supervision authority over “larger participants” in particular industries. Over the last several years, the CFPB has released rules defining “larger participants” in certain fields. In 2016, we expect a larger participant rule for auto lending and installment lending. The CFPB's most-recent semi-annual rulemaking report, further explained, “We also expect to consider whether rules to require registration of lenders in these markets or other non-depository lenders would facilitate the Bureau's supervision of such entities.”
- Enforcement Orders – We expect the CFPB will issue several enforcement orders this year that will provide additional guidance on UDAAP in the installment lending industry. As we have discussed in a previous post, the CFPB is currently investigating one of the largest companies in the installment lending industry.
- Other Activity – The CFPB is also planning to further address prepaid accounts, overdrafts on checking accounts, debt collection, and mortgage servicing.