The president and CEO of the American Financial Services Association (AFSA) today asked the Consumer Financial Protection Bureau (CFPB) to use “the well-accepted administrative rulemaking process” instead of what he said are “one-off and nontransparent enforcement proceedings.”
“Instead of attempting to set rules through one-off and nontransparent enforcement proceedings or overly broad and unclear guidance, AFSA and its members want the CFPB to use the well-accepted administrative rulemaking process when needed so that all players – consumers, businesses, advocacy groups and policymakers – can provide input,” said Bill Himpler, AFSA President and CEO, in a statement. “Consumers and our industry need clarity, not confusion, to ensure all consumers can access the credit they need.”
“Our industry is already highly regulated at the state and federal levels and makes every effort to play by the rules and serve customers well,” Himpler said. “All we’re asking is that the CFPB fulfill its responsibility and give us clear rules to follow.”
The CFPB was established in 2011 following the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act. It operates as an agency of the United States government with the primary mission to enforce federal consumer financial laws and protect consumers in the financial sector.
The bureau's jurisdiction encompasses banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors, and other financial companies operating in the United States. The bureau spent $2.75 billion in FY 2023, according to the Government Accounting Office (GAO).
AFSA said in a press release that, “over the past year, the CFPB has launched enforcement actions that cite business practices it alleges are violations, but which are legal under state laws.”
“The agency is also punishing creditors for not asking about such costs as groceries or childcare before making a loan, and requiring for the first time that certain lenders ask customers for such information a s sexual orientation, and to report it to the agency,” said the release.
AFSA announced that it is launching a "national education effort" to advocate for "clarity" from the CFPB but also to promote the industry's "Consumer Credit Protections" standards.
Federal Newswire last month submitted a Freedom of Information Act (FOIA) request to the CFPB seeking a list of all organizations that have received payments from the bureau’s “Civil Penalty Fund” since the bureau’s formation in 2011.
That fund is used to collect penalties levied as a result of the bureau’s enforcement actions against companies. The fund is supposed to be used to compensate alleged victims of consumer finance violations. The CFPB, however, can allocate money from the Civil Penalty Fund to non-profits and other organizations that the bureau says will further consumer education and financial literacy, if the bureau determines that it cannot locate actual victims of the alleged penalties are too small to allocate.
The Civil Penalty Fund collected $1.9 billion in FY2023, which is more than the $1.49 billion collected from FY2012 through FY2022, according to the bureau’s latest financial report.
That financial report provides only the names of companies targeted by bureau enforcement actions and total amounts collected and allocated by the Civil Penalty Fund. It does not list the specific groups who received payments from the fund for “consumer education and financial literacy."
Established in 1916, AFSA is a national trade association for the consumer credit industry in the United States. Headquartered in Washington, D.C., AFSA represents a wide range of financial services companies, including consumer and commercial finance companies, auto finance companies, mortgage lenders, credit card issuers, and industry suppliers. The association advocates for its members at both the federal and state levels, focusing on legal, regulatory, and legislative issues related to consumer credit.
