On February 12, 2018, the Consumer Financial Protection Bureau (“CFPB”) released its strategic plan for 2018 through 2022. The plan, which will take two years to implement, calls for placing new restrictions on the CFPB’s enforcement authority. “The proposed reforms would impose financial discipline, reduce wasteful spending, and ensure appropriate congressional oversight,” according to a statement also released on that date. Mick Mulvaney, acting interim director of the CFPB, stated that the Bureau’s new direction will provide “clarity and certainty to market participants.”
Under the proposal, which also is included in President Trump’s 2019 budget plan, the CFPB would be funded by Congress rather than the Federal Reserve. This change would arguably give lawmakers more oversight and influence over the agency’s priorities – a common complaint from critics of the CFPB. The CFPB’s 2019 budget also would be capped at its 2015 level – $485 million – compared to a projected $630 million this year.
In its strategic plan, the CFPB lays out revised mission and vision statements:
Mission: To regulate the offering and provision of consumer financial products or services under the Federal consumer financial laws and to educate and empower consumers to make better informed financial decisions.
Vision: Free, innovative, competitive, and transparent consumer finance markets where the rights of all parties are protected by the rule of law and where consumers are free to choose the products and services that best fit their individual needs.
The CFPB also lists three long-term strategic goals and objectives that will drive the Bureau’s mission:
|Goal 1:||Ensure that all consumers have access to markets for consumer financial products and services.|
|Goal 2:||Implement and enforce the law consistently to ensure that markets for consumer financial products and services are fair, transparent, and competitive.|
|Goal 3:||Foster operational excellence through efficient and effective processes, governance, and security of resources and information.|
Regarding the CFPB’s enforcement goal, the Bureau notes that an important objective of the Dodd-Frank Act is to ensure federal consumer laws are enforced consistently for banks and nonbanks alike. Nonbank entities include “mortgage companies, payday lenders, private education lenders, and larger participants in other markets as defined by rules issued by the Bureau.” According to the CFPB, because “[i]ndustry structure is always changing . . . so too will the number of institutions that fall under the Bureau’s supervisory authority.”
In terms of the CFPB’s rulemaking authority, the plan lists several strategies which are particularly relevant to the financial services industry, including:
- Conducting empirical assessments to evaluate the effectiveness of significant Bureau rules in achieving the purposes and objectives of the Dodd-Frank Act and the CFPB’s specific goals.
- Engaging in rulemaking where appropriate to address unwarranted regulatory burdens.
- Carefully evaluating the potential benefits and costs of contemplated regulations.
- Promoting practices that benefit consumers, responsible providers, and the economy as a whole.
In addition, the Strategic Plan notes the importance of the CFPB keeping pace with changing technology. “In recent years, evolving technologies have driven rapid change in the consumer financial marketplace,” states the plan. “The swift pace of change can provide benefits, opportunities, and risks to both consumers and institutions. The Bureau must keep pace with the evolution of technology in consumer financial products and services in order to accomplish its strategic goals and objectives.” This is especially important to debt collectors and mortgage servicers who communicate with consumers through electronic means that did not exist when the Fair Debt Collection Practices Act was first approved in 1977.
The 16-page strategic plan deviates considerably from the draft of the report that was released last October prior to Mulvaney assuming leadership of the CFPB. The revised strategic plan echoes Mulvaney’s previous statements that the CFPB would dampen aggressive enforcement and regulatory actions that he viewed as the hallmark of the previous administration. As the report states, the CFPB will now operate “with humility and moderation.”
As we reported earlier this month, Mulvaney has indicated that he will reserve administrative enforcement actions for only the most egregious violations of consumer protection law. Mulvaney has further emphasized his intent to rely on formal rulemaking to provide institutions under the CFPB’s purview with notice of “what the rules are before being charged with breaking them.”
The Bureau already has taken measures to apply Mulvaney’s vision, including the recent dismissal of a four-year-old payday lending lawsuit and the announcement that the CFPB would reconsider a controversial rule affecting the payday and auto-title lending industries.
We will continue to monitor the actions of the CFPB and other regulatory agencies for future developments.