The Consumer Financial Protection Bureau’s (CFPB’s) regulatory strategy was always expected to change under the Trump administration. Now, with the February release of the Bureau’s 2018-2022 strategic plan, the nature of that change has become more apparent.
Acting Director Mick Mulvaney clearly set the tone when announcing the plan, saying: “If there is one way to summarize the strategic changes occurring at the Bureau, it is this: we have committed to fulfill the Bureau’s statutory responsibilities, but go no further.”
In fact, a key part of what is now happening at the CFPB is a change in tone. For example, the CFPB’s new strategic plan states that fair lending laws and statutory prohibitions against Unfair, Deceptive, or Abusive Acts or Practices (UDAAPs) will continue to be enforced against both bank and non-bank firms. But based on the signal that the plan has sent, the Bureau may be less inclined to use creative or innovative theories to support its regulatory issuances, supervisory findings, and enforcement actions. The Bureau may also attempt to carry out its activities in a less burdensome way.
Comparing the CFPB’s old and new strategic plans sheds light on the different approaches of its old and new leadership. For example, both set forth a mission and a vision, but where the prior plan sketched out a more expansive consumer focus, the current plan closely tracks the statutory language and maintains a reserved tone.
Contrast the Mission and Vision stated in the CFPB’s 2013-2017 plan:
“The CFPB is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives…
If we achieve our mission, then we will have encouraged the development of a consumer finance marketplace:
- where customers can see prices and risks up front and where they can easily make product comparisons;
- in which no one can build a business model around unfair, deceptive, or abusive practices;
- that works for American consumers, responsible providers, and the economy as a whole.”
With the Mission and Vision that the CFPB just announced in the 2018-2022 plan:
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
[a direct quote from the CFPB’s enabling statute]
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.
Within the new plan, the CFPB has emphasized addressing, “outdated, unnecessary, or unduly burdensome regulations in order to reduce unwarranted regulatory burdens.” Moreover, to foster accountability, the new plan explains that the Bureau will periodically evaluate its operations, “to ensure effective management of resources and risk.” Consistent with this theme, the Bureau is publishing a series of Requests for Information (RFIs) seeking comment on its enforcement, supervision, rulemaking, market monitoring, and education activities. According to the Bureau, “these RFIs will provide an opportunity for the public to submit feedback and suggest ways to improve outcomes for both consumers and covered entities.”
Notably, the Supervisory and Enforcement RFI’s issued by the CFPB in the last several weeks are framed to ask for information about how to achieve meaningful burden reduction, “while continuing to meet the Bureau’s statutory and regulatory objectives and ensuring a fair and transparent process.” So supervision, enforcement, and regulation will continue, but perhaps in a less burdensome way and perhaps with clearer communication with covered firms.
Financial services companies would do well to monitor CFPB developments closely. For now, we are seeing a shift, but the impact may be subtler than some would expect. Going forward, the regulatory, supervisory, and enforcement experiences may be less burdensome for covered firms. But, it is critical that they maintain policies, programs, and processes that ensure compliance with consumer protection requirements, as the CFPB has emphasized that it is not abandoning its statutory responsibility to examine for compliance with consumer protection requirements, and take enforcement action where serious violations occur.