On April 29, 2019, Acting Superintendent of the New York Department of Financial Services (the "NYDFS" or "Department") Linda A. Lacewell announced the appointment of Kathrine A. Lemire to serve as Executive Deputy Superintendent overseeing the new Consumer Protection and Enforcement Division (the "Division").1 The Division will combine the Enforcement and Financial Fraud Division and the Consumer Protection Division and be responsible for protecting New York State consumers and financial markets from fraud and enforcing laws applicable to NYDFS-regulated entities. The NYDFS announcement describes Ms. Lemire, a former Assistant U.S. Attorney for the Southern District of New York and counsel to the New York City police commissioner, as a "highly respected and experienced prosecutor, compliance and regulatory professional" well-positioned to lead the Division.
The Department, which regulates and licenses insurance companies, banks and other financial services institutions (e.g., money transmitters and consumer and mortgage lenders and servicers), has been active in the consumer protection space since its establishment in 2011 via the merger of the New York State Banking and Insurance Departments. From its inception, the NYDFS has vigorously enforced consumer protections, bringing enforcement actions against a wide range of consumer-facing companies for apparent violations of New York State insurance, banking and financial services laws and regulations. The Department also recently imposed a first-of-its-kind cybersecurity regulation on NYDFS-regulated financial institutions in part to protect consumers from unauthorized disclosure of personal information.
In furtherance of these efforts, the Division is tasked with protecting and educating consumers, combatting consumer fraud and ensuring that NYDFS-regulated entities comply with applicable law. The Division is also responsible for "developing investigative leads and intelligence" to assist the NYDFS with enforcing New York State insurance, banking and financial services laws and regulations, particularly regarding cybersecurity and financial crimes.2 According to the NYDFS, the Division will be composed of a enforcement division, investigations and intelligence division, civil investigations unit, producers unit, consumer examinations unit, student production unit and a Holocaust claims processing office.
While NYDFS-regulated entities should be aware of the Division, all of the Division's responsibilities, as described by Acting Superintendent Lacewell, are already performed by the two existing NYDFS divisions being merged to form the Division. Accordingly, the establishment of the Division can be viewed primarily as an attempt to streamline processes through consolidation under Ms. Lemire, rather than a substantive change to the NYDFS' mission. However, NYDFS-regulated entities should closely observe whether the Division adopts an assertive posture to counterbalance recent policy changes implemented by the US Consumer Financial Protection Bureau (CFPB) widely seen as deprioritizing consumer protection.