Expanding access to the payments system by non-bank providers, and eliminating overlapping examination subject areas by regulators, are among the recommendations – out of 100 total – from a taskforce on federal consumer financial law released Tuesday.
The report was issued by the Consumer Financial Protection Bureau’s (CFPB) Taskforce on Federal Consumer Financial Law after about a year of deliberations. Formed in January 2020, the group was charged with developing recommendations for ways to improve and strengthen consumer financial laws and regulations. The model for the group, according to the CFPB, was a commission established by the Consumer Credit Protection Act in 1968.
According to the bureau, that commission’s report contained original empirical data, information, and analyses in support of its final recommendations. The data, findings, and recommendations from the commission were all made public and the report led to significant legislative and regulatory developments in consumer finance, the bureau said.
In a release Tuesday, the CFPB highlighted 16 of what it said were more than 100 recommendations made in the report. The 16 highlighted included:
- Identify competitive barriers and make appropriate recommendations to policymakers and regulators for expanding access to the payments systems by non-bank providers.
- Identify opportunities to coordinate regulatory efforts. “For example, the Bureau and prudential regulators should eliminate overlapping examination subject areas and reconcile inconsistent examination standards that unnecessarily expend multiple resources and can cause confusion,” the bureau stated.
- Facilitate creditor access to immigrants’ credit information prior to their arrival in the United States in order to use that information in credit decisions.
- Work with other agencies to create a unified regulatory regime for new and innovative technologies providing services similar to banks.
- Establish 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 White House Office of Information and Regulatory Affairs (OIRA) for review.
- Exercise caution (which it said was a “recommendation for the CFPB, Congress, and other federal and state regulators”) in restricting the use of nonfinancial alternative data, “which can be very useful indicators of creditworthiness.”
Other highlighted recommendations were:
- Authorize the CFPB to issue licenses to non-depository institutions that provide lending, money transmission, and payments services.
- Expand access to the payments system by unbanked and underbanked consumers and ensure consistent treatment by applying the same rules to similar financial products.
- Research and develop policies tailored to the unique challenges of formerly incarcerated people, and work with state and federal authorities to improve protection of this population.
- Research and develop policies to address problems of financial inclusion in rural communities.
- Facilitate creditor access to immigrants’ credit information prior to their arrival in the United States in order to use that information in credit decisions.
- Research consumer reporting issues that arise in connection with a consumer’s bankruptcy.
- Consider 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.
- Continue to increase dialogue with state regulators to bridge knowledge gaps and streamline regulation.
- Evaluate any positive or negative effect on inclusion as part of the bureau’s cost-benefit analyses as appropriate.
- Clarify the obligations of credit reporting agencies (CRAs) and furnishers with respect to disputes under the Fair Credit Reporting Act (FCRA).
- Assess periodically the accuracy and completeness of consumer credit reports.