This week, CFPB Director, Rohit Chopra, appeared before the U.S. Senate Committee on Banking, Housing, and Urban Affairs and the U.S. House Committee on Financial Services in conjunction with the CFPB’s submission of its Semiannual Report to Congress. In his prepared testimony before both committee, the Director highlighted some of the CFPB’s work over the past six months, which includes:
- Focusing enforcement on repeat offenders and other major market actors: The CFPB is shifting enforcement resources away from investigating small firms and instead focusing on repeat offenders and large players engaged in large-scale harm (we previously discussed this new enforcement priority in a blog post here).
- Enhancing transparency through guidance: A renewed focus on creating guidance, such as advisory opinions, compliance bulletins, policy statements, and other publications, that are easy to follow, enforce, and understand.
- Rethinking approach to regulations: Emphasis on carrying out the laws and directions of Congress and the President, including Section 1033 of the Consumer Financial Protection Act (CFPA), “a provision that could increase competition and choice in consumer financial markets,” and Section 1071 of the CFPA, regarding the collection of small business data (we previously discussed the proposed rule under Section 1071 in a blog post here).
- Listening and learning from the business community: Director Chopra reiterated the importance of engaging with local financial institutions and the broader business community.
- Promoting competition: Recognizing that “competition leads to innovation, attractive rates, quality service, and benefits that may be difficult to quantify.” The CFPB intends to launch initiatives to identify “ways to lower barriers to entry and increase the pool of firms competing for customers based on quality, price, and service.”
- Preparing for the era of Big Tech and Big Data in banking: The Director warns of a consolidated market structure among Big Tech and Big Data giants that “comes with risks and raises a host of questions about privacy, fraud, discrimination, and more.” The CFPB is currently studying these issues as part of its inquiry into Big Tech and plans to issue research reports to contribute to consumer finance policy (we previously discussed this inquiry in a blog post here).
Putting It Into Practice: Six months into his leadership, Director Chopra has moved quickly in several areas including a request for information on “junk fees” and changes to UDAAP examination procedures to target non-credit discrimination. While CFPB has been met with significant criticism from lawmakers and industry, financial companies should take stock of the regulator’s recent moves and ensure that their activities align with the CFPB expectations.