On June 14, 2022, the Consumer Financial Protection Bureau (“CFPB”) released a request for information about relationship banking and consumers’ ability to obtain information from certain financial institutions (“RFI”).1 The CFPB is concerned that relationship banking is on the decline and consumers may be struggling to obtain basic information and experiencing poor customer service. The RFI is intended to bring a “sharper focus on more relationship-based banking” and may lead to further agency action on consumers’ ability to request information from their financial institutions.
While a consumers’ ability to obtain information from certain financial institutions under Section 1034(c) of the Dodd-Frank Act is relatively limited, the CFPB may be poised to use it as the basis to regulate how financial institutions engage with consumers. Financial institutions should consider carefully reviewing the RFI to understand the CFPB’s position regarding relationship banking and identify areas where the consumer experience can be enhanced. This will help them stay ahead of ever-expanding supervisory expectations.
Comments on the RFI are due by July 21, 2022. In this Legal Update, we provide background on Section 1034(c) of the Dodd-Frank Act and summarize the RFI.
Section 1034(c) of the Dodd-Frank Act requires certain financial institutions to comply with a consumer’s request for information in the control or possession of a financial institution concerning a consumer financial product or service that the consumer obtained from the institution, including supporting written documentation, concerning the account of the consumer.2 The requirement only applies with respect to insured depository institutions and insured credit unions with total assets of more than $10 billion and affiliates of such persons. Further, a financial institution is not required to provide a consumer with the following types of information:
- any confidential commercial information, including an algorithm used to derive credit scores or other risk scores or predictors;
- any information collected by the covered person for the purpose of preventing fraud or money laundering, or detecting or making any report regarding other unlawful or potentially unlawful conduct;
- any information required to be kept confidential by any other provision of law; or
- any nonpublic or confidential information, including confidential supervisory information.
The CFPB has never publicly interpreted Section 1034(c), and the only references to it by the agency appear to be a few enforcement actions that imposed it as a conduct remedy on financial institutions that were not within the statute’s scope.
The preamble to the RFI characterizes Section 1034(c) as granting consumers the “legal right to obtain information,” notwithstanding the absence of the word “right” in the statute. The CFPB then connects this “right” to obtain information to what the agency believes is consumers’ reasonable expectation that financial institutions provide “high levels of customer service.” The RFI does not, however, explain the legal basis for connecting the ability to obtain information to the manner or level of service that a financial institution provides to its customers. Rather, it describes how relationship banking would respond to consumer desires for high-quality human interactions in their financial lives and access to helpful digital channels—items that may be true but do not relate to Section 1034(c). Further, it states that the CFPB will endeavor to “help” financial institutions of all sizes to implement a relationship banking model and provide high levels of customer service.
The RFI poses 14 questions to help it understand customer service “obstacles” that consumers face in the banking market and the type of information that would be helpful for consumers to obtain from financial institutions pursuant to Section 1034(c). The first two questions focus on the types of information that consumers may request from financial institutions. Several other questions ask about how customers may request information under Section 1034(c). However, about half of the questions have no obvious connection to Section 1034(c) and ask about topics such as general customer service call wait times, how COVID-19 has affected customer engagement, and whether customer service obstacles have impeded consumers from accessing banking services.
The RFI revives a provision of the Dodd-Frank Act that has been unused since the law’s enactment over 10 years ago. This is consistent with Director Rohit Chopra’s recent efforts to focus the CFPB’s attention on topics far afield from the agency’s original mission, such as bank mergers.3 It also is another example of him combing through a statute to identify previously unused authorities.4
However, all financial institutions should consider carefully reviewing the RFI to understand the CFPB’s position regarding relationship banking. The mere issuance of the RFI indicates that this will be an area of focus for the agency and may even become a supervisory expectation for larger financial institutions. Further, the questions in the RFI provide a roadmap to the areas of the customer relationship that the agency is most likely to review. Putting aside the expansive role the CFPB envisions for itself in compelling relationship banking, which is questionable, some financial institutions may consider identifying areas where the consumer experience can be enhanced. This could both head off further agency action and improve an institution’s reputation with customers and potential customers.
Finally, financial institutions should consider reviewing and refreshing their procedures for complying with Section 1034(c). Large financial institutions receive many communications from customers, and not all representatives may know when an institution is required to provide information to a customer. Regardless of the CFPB’s views on relationship banking, the RFI offers an opportunity and reminder for financial institutions to ensure that they are in compliance with their obligations under Section 1034(c).