Cheryl Lawson, EVP, compliance review for John M. Floyd & Associates (JMFA), recently examined the status of the Consumer Financial Protection Bureau as it undergoes leadership changes. Her assessment follows.
With the recent release of its five-year strategic plan, Consumer Financial Protection Bureau (CFPB) leadership has reinforced the bureau’s plan “to fulfill its statutory responsibilities, but go no further,” according to acting director Mick Mulvaney. The high-level plan, which draws directly from the Dodd-Frank Wall Street Reform and Consumer Protection Act, incorporates strategic changes in the Bureau’s focus on regulating consumer financial products and services under existing federal consumer financial laws, enforcing those laws judiciously, and educating and empowering consumers to make better informed financial decisions.
Wording in the new plan reflects changes to the bureau’s mission that were released in December 2017. At that time, it appeared that the focus was shifting toward more efforts to identify and address outdated, unnecessary or unduly burdensome regulations; hold institutions accountable to federal consumer financial laws; and less on protecting consumers. Of note, the plan does not address any specific product or service area, such as overdraft programs. Instead, it is described by Mulvaney as a “ready roadmap … that should serve as a bulwark against the misuse of our unparalleled powers.”
Coming off several years of a tumultuous regulatory environment, this stance by the CFPB may provide some stability on the regulatory front. While the bureau has been collecting data and studying overdrafts for several years, and still has an oversight role for $10B and above banks, it does not appear that implementing any new rulings is a priority at this time.
JMFA continues to monitor the regulatory environment regarding overdraft programs. We are also watching activity related to consumer litigation against financial institutions for non-disclosure, posting order and available balance issues. During the past two years, this has been the most substantial threat to financial institutions that fail to properly disclose information to account holders.
As a result of the recent shift in priorities, it appears that the message from regulators is simply, “Here are the regulations, follow the regulations.” In this environment, you can rest assured that staying the course with JMFA’s recommendations for full disclosure of your overdraft program fees, policies and procedures will help you to maintain 100 percent compliance as you continue to provide a valuable service for your account holders.