On January 5, 2021, the CFPB’s (the “Bureau”) Taskforce on Federal Consumer Financial Law (the “Taskforce”) released a report (the “Report”) recommending how consumer protection in the financial marketplace may be improved. Chartered by the Bureau in January of 2020, the Taskforce was charged with “examin[ing] the existing legal and regulatory environment facing consumers and financial services providers,” and “report[ing] its recommendations for ways to improve and strengthen consumer financial laws and regulations.”
The Report consists of two volumes. Volume I provides a historical and economic overview of consumer finance, details the key principles at the core of federal consumer financial law and policy, and articulates particular topics important to the Bureau’s work. Volume II develops recommendations to improve and strengthen the application of financial laws and regulations. Volume I is nearly 800 pages long and Volume II is 99 pages long. The Report is organized around the five key areas of analysis of consumer protection: (i) the legal framework of consumer protection, (ii) consumer information and disclosure, (iii) competition, innovation, and consumer choice, (iv) inclusion and access, and (v) regulatory modernization.
In the Report, the Taskforce makes approximately 100 recommendations to the CFPB, Congress, and state and federal regulators to strengthen consumer protection. Key recommendations include:
- Authorizing the Bureau to issue licenses to non-depository institutions that provide lending, money transmission, and payment services;
- Expanding access to the payment system by unbanked and underbanked consumers, ensuring consistent treatment by applying the same rules to similar financial products;
- Developing policies tailored to the unique challenges of formerly incarcerated people;
- Considering the benefits and costs of preempting state law where conflicts can impede the provision of valuable products and services, such as the regulation of FinTech companies engaged in money transmission;
- Establishing independent review of the Bureau’s regulatory cost-benefit analyses by staffing an office of cost-benefit analysis at the Bureau and or by submitting its analyses to the Office of Information and Regulatory Affairs for review;
- Exercising caution (a recommendation for the Bureau, Congress, and other federal and state regulators) in restricting the use of nonfinancial alternative data;
- Creating a unified regulatory regime for new and innovative technologies providing services similar to bank services;
- Evaluating potential effects on inclusion as part of the Bureau’s cost-benefit analyses as appropriate;
- Facilitating creditor access to immigrants’ credit information prior to their arrival in the United States in order to use that information in credit decisions;
- Researching consumer reporting issues that arise in connection with a consumer’s bankruptcy.
Assessing the full impact of the report will require a more detailed review of its text, analysis, and many recommendations. The significance of the report may depend, in part, on the reception it receives from Bureau leadership and other stakeholders in 2021 and beyond.