There is a titanic battle over the Consumer Financial Protection Bureau going on in Washington. One side is led by Congressional Republicans who have never been comfortable with the formation and structure of the Bureau. And, they have never given up on the effort to place the Bureau under budgetary control of Congress, and replace the autonomous Director with a Commission form of leadership. This side has been on the ascendency with President Trump's appointment of Acting Director Mulvaney, who has publicly rebuked the Bureau as a “joke.” Acting Director Mulvaney is now in charge.
The other side is led by Democratic Senators including Sen. Sherrod Brown (D-OH). Sen. Brown just yesterday accused the new leadership of the Bureau of abandoning its mission of enforcing the fair lending laws and of subverting government protection of families.
Passage of the Dodd-Frank Act eight years ago was an epic struggle; and there has been a tug-of-war ever since. Just when supporters of the currently constituted CFPB thought that the battle was won, the election of a Republican President and a Republican Congress has caused them much consternation. And, just now when opponents of the currently constituted CFPB thought that their day in the sun had finally arrived, the waning popularity of President Trump and the real possibility of losing one or both Houses of Congress in the mid-term elections, has caused much concern to their side.
So, what is a consumer finance company to do in the face of all of these maneuverings in Washington? In my judgment, the answer is, “stick to your knitting.” Here is what I mean by this:
First, observe all of the best practices of traditional installment lending including:
- Conduct business in a manner that reflects professionalism, integrity, competence, and courtesy to foster your customer's trust and confidence in you.
- Promptly process loan applications.
- Encourage borrowers or potential borrowers to use credit responsibly.
- Make a good faith effort to resolve any customer dispute.
Second, respect and follow applicable law and regulation:
- Make credit available to prospective borrowers without regard to race, gender, marital status.
- Protect the borrower's confidentiality and privacy rights.
- Refrain from engaging in any intentionally deceptive or misleading business practices.
- Maintain truthfulness and accuracy in advertising.
- Exercise lawful collection practices.
- Use email, text and SMS messaging in strict compliance with law and regulation.
Finally, recognize the role of competition. I've written recently that the most pressing threat to your business now comes from regulated lenders—banks and credit unions. Click here to view blog entitled, "WHAT IS THE NEXT BIG THREAT TO CONSUMER FINANCE COMPANIES?"
The appetite for enforcement of the Dodd Frank Act from Washington is going to wax and wane over the coming years. The impact of bankruptcies and plaintiff lawyers on your business success will sometimes be greater than other times, too.
But, the loss of business to competitors who treat their customers better than you should be the real source of concern. And, this is the one impairment that is completely within your own ability to address.