As Washington retreats, what's subsequent for consumer financial regulation?

What has a change of care in Washington meant for law of consumer financial products – and what will it meant in a future?

The sovereign supervision is stepping back, and a states are stepping up, according to a new report.

“Fewer sovereign coercion actions and deregulation could be a new normal for a foreseeable future,” a Goodwin law organisation wrote in a annual Consumer Finance Year in Review. “This, total with sovereign agencies stability to adjust their coercion and regulatory priorities as they transition divided from their financial crisis-era concentration and confront new technology, products, and services, means that it is some-more critical than ever that consumer financial companies guard this changeable landscape.”

The consumer financial services landscape stays really uncertain, given that a sovereign group that sits during a heart of a space, a Consumer Financial Protection Bureau, might not survive, Goodwin noted.

Read: CFPB announces new trail that boundary a ‘unparalleled powers’

Here are some specific takeaways from a past year, as good as a demeanour ahead.


In 2017, sovereign and state entities filed 49 coercion actions, a same as in 2016, though down neatly from 2015. Goodwin thinks that signals dual things: Crisis-era issues are receding, and that regulators and attention participants are entrance to an bargain after years of tussling.

Many of a mortgage-related regulator actions final year were associated to Federal Housing Administration lending, a use that’s pushed many banks out of participating in FHA programs and riled many lenders.

Goodwin also remarkable that mortgages – quite servicing – were a second-most-complained-about subject to a CFPB. The organisation expects regulators to continue to concentration on servicing complaints. But it thinks a CFPB might desert a Dodd-Frank requirement that lenders request borrowers’ ability to repay loans, as it has already signaled that attention participants find a sequence too “burdensome.”

Credit reporting

The CFPB brought 8 coercion actions relating to credit stating or credit correct services, while a FTC brought one in 2017.

Goodwin expects a CFPB to continue to concentration on holding companies accountable for accurate credit record-keeping and reporting. But a organisation also expects to see an enlargement of a Fair Credit and Reporting Act to be practical to firms that aren’t traditionally credit-reporting bureaus, such as health insurers.

Meanwhile, it’s value observant that one of a biggest credit-reporting stories of 2017 — a Equifax

EFX, +1.21%

  information crack and a repercussions — might finish adult in a hands of lawmakers, rather than regulators.

Read: Senator Elizabeth Warren’s bureau creates new allegations opposite Equifax

Student lending

Most coercion actions relating to tyro lending came from a sovereign supervision in 2017, a retreat of 2016, when states took a lead. As with mortgages, a concentration shifted to servicing, such as a CFPB’s lawsuit opposite Navient, a largest student-loan servicer, for crude practices such as unwell to warning borrowers to remuneration deadlines and providing fake information about amends options.

That’s expected to continue into 2018, Goodwin said. The CFPB has flagged dual issues: servicers receiving improper information about students’ enrollment status, causing them to cancel moratorium standing prematurely, and a use of providing dubious information about how seductiveness is handled.

But some movement might change to a states. More states are adopting student-loan bills of rights, that might yield state agencies some cover for holding servicers accountable.

Debt collection and allotment

Goodwin counted 47 sovereign and state coercion actions on debt allotment and service in 2017. While that series was not most opposite than in 2016, a increasing participation of a states, even as a sovereign supervision stepped aside, was.

Most regulator actions focused on dubious or badgering communications, including creation fake promises to revoke debts, and collecting on debts but perplexing to determine they were indeed owed. Goodwin expects a CFPB to start a routine of environment new manners in late 2018 or early 2019 that could, as Goodwin put it, “foreshadow a renewed bid by a CFPB to boost a law and coercion of a debt collection process.”

What will 2018 bring, some-more broadly? Goodwin expects some-more movement from states, including those it calls “vocal opponents of a Administration” and those that have turn some-more active. Since 2015, a organisation noted, scarcely 50% of all state coercion actions have taken place in Massachusetts, New York, and Florida.

Another bridgehead might be over a destiny of fintech companies. In 2016, a Office of a Comptroller of a Currency, a bank regulator, pronounced it was deliberation extenuation special bank charters to such enterprises in sequence to umpire them some-more uniformly. But some state groups have sued, arguing that such a step would break existent consumer protections.

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