The end of the year is always a time for reflection for me. As we kick 2016 to the curb, I thought I'd take this opportunity to look back at 2016 and look ahead to 2017.
2016: A Look Back
Looking back at 2016, the first things that come to my mind are the aggressive rule making agenda undertaken by the CFPB and their struggle to implement rules based upon a less than full understanding of the industries they attempt to regulate. With 2016 came proposed rules on arbitration and payday lending, adjustments and clarification to the mortgage servicing rules and TRID, as well as an unwieldy and incomplete proposal on debt collection. The year also saw the CFPB continued to flex its muscle expanding its reach into data privacy and fintech , as well as to inthe way attorneys litigate collection law suits (covered in our prior edition). Continuing its infatuation with technology, the CFPB also introduced new data tools including its ”Consumer Credit Trends” tools. In many ways, it was the most ambitious of years for the CFPB.
As we look forward to 2017, we will closely follow the D.C. Circuit’s en banc review of the CFPB’s jurisdiction. Coupled with the election of Donald Trump and a Republican majority in Congress here are a couple of things ) think we can expect to see in 2017:
- Reform of the CFPB: It would not be surprising to see the makeup of the CFPB change to a five person commission and/or to see the CFPB lose its designation as an independent agency. Challenges have come from the judiciary and legislative branches of government in recent months and we can expect to see reform from the Trump administration. The Financial Services Committee of the House attempted last year to replace Cordray with a bipartisan commission through introduced legislation. Similarly, the incoming administration has echoed a desire to reign in the Bureau. Finally, the D.C. Circuit has weighed in on the constitutionality of the CFPB and its ruling is now being considered en banc by its entire panel of judges. Depending upon the outcome of the D.C. Circuit’s en banc review of the PHH decision, the CFPB may become an executive agency vs. an independent agency. The net result may be that the CFPB and its regulations become subject to the regulatory review process of the Office of Management and Budget.
- Pending Rules. The CFPB’s pay day and arbitration rules are in jeopardy and may never see the light of the day if the PHH holding is upheld and the CFPB loses its status as an independent agency or if any of the other forces outlined above come to play.
- When all else fails, UDAAP Carries the Day. The CFPB will continue to regulate through enforcement using the UDAAP provisions of Dodd Frank when regulatory authority does not otherwise exist.
- Debt Collection: the CFPB will continue to struggle with the two ton gorilla of debt collection by first putting forward a proposal for first party collections. We expect to see a SBREFA panel scheduled for some time in the first half of 2017. Looking further forward, we are likely to see a proposed rule on debt collection by the end of 2017.
- Marketing and Sales. Regulators will continue to focus on marketing and sales aspects of consumer financial service products and continue to emphasize comprehensive compliance management systems.
- Status Quo. Institutions subject to enforcement need to continue to do business under the assumption that nothing will change and remain vigilant in their compliance. As we sit here today, the status quo remains the order of business.