In a June 17 blog post, Consumer Financial Protection Bureau (CFPB or Bureau) Director Rohit Chopra announced that the CFPB intends to “move away from highly complicated rules” in favor of “simpler and clearer rules.” As part of this effort, the CFPB will be “dramatically increasing the amount of guidance it is providing to the marketplace” and that it aspires such guidance to be simple and straight forward.

Director Chopra explains that complex rules, regulations, and guidance increase compliance costs, create loopholes, and disadvantage smaller companies competing with larger market players with market power or resources. The post also provides insight into Director Chopra’s perception of market participants. He notes that legal complexity creates the opportunity for companies to evade regulatory compliance and ignore the law by plausible deniability, strategic or intentional “misunderstandings,” and creative lawyering.

Director Chopra stated that the Bureau is specifically reviewing three rules in this vein:

  • Rules related to the Credit CARD Act of 2009;
  • Regulation V, interpreting the Fair Credit Reporting Act; and
  • The CFPB’s Qualified Mortgage Rules.

We found this announcement curious. Throughout its existence, the Bureau has eschewed bright-line rules, instead preferring to use its UDAAP authority to announce new standards of conduct not contained in any specific statute or rule. We believe it is unlikely that the director is signaling a departure from the Bureau’s approach to “regulation by consent order,” even though his statements would facially seem to suggest as such. Second, we doubt that subjects as complex as the CARD Act, Regulation V, and the QM rule can be significantly simplified and streamlined. Not only are the underlying statutes complex to begin with, the manner in which these statutes should be applied to a wide variety of market conditions and the need to balance competing priorities and situations led to the rules’ current complexity. The same is true of the Section 1071 rulemaking in which the Bureau is currently engaged — that rulemaking release was approximately 900 pages long because of the inherent complexity of the subject matter and because of the Bureau’s desire to cover a wide variety of scenarios that could affect reporting related to small business loans.

Simple, bright-line rules would be welcomed by the industry, but the prospect of such rules emerging seems fairly unlikely in our view.

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Sarah Pruett

Sarah defends banks, fintechs, and financial services companies facing state and federal government investigations, enforcement proceedings, and individual and class action lawsuits involving the Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), Equal Credit Opportunity Act (ECOA), Truth in Lending…

Sarah defends banks, fintechs, and financial services companies facing state and federal government investigations, enforcement proceedings, and individual and class action lawsuits involving the Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), Equal Credit Opportunity Act (ECOA), Truth in Lending Act (TILA), Title X of the Dodd-Frank Act (UDAAP), state consumer protection laws, and fraud.

Photo of Chris Willis Chris Willis

Chris is the co-leader of the Consumer Financial Services Regulatory practice at the firm. He advises financial services institutions facing state and federal government investigations and examinations, counseling them on compliance issues including UDAP/UDAAP, credit reporting, debt collection, and fair lending, and defending…

Chris is the co-leader of the Consumer Financial Services Regulatory practice at the firm. He advises financial services institutions facing state and federal government investigations and examinations, counseling them on compliance issues including UDAP/UDAAP, credit reporting, debt collection, and fair lending, and defending them in individual and class action lawsuits brought by consumers and enforcement actions brought by government agencies.

Chris also leverages insights from his litigation and enforcement experience to help clients design new products and processes, including machine learning marketing, fraud prevention and underwriting models, product structure, advertising, online application flows, underwriting, and collection and loss mitigation strategies.

Chris brings a highly practical focus to his legal advice, informed by balancing a deep understanding of the business of consumer finance and the practical priorities of federal and state regulatory agencies.

Chris speaks frequently at conferences across the country on consumer financial services law and has been featured in numerous articles in publications such as the Wall Street Journal, the New York Times, the Washington PostAmerican BankerNational Law JournalBNA Bloomberg, and Bank Safety and Soundness Advisor.

Photo of David N. Anthony David N. Anthony

David is an experienced trial attorney with a concentration in litigating financial services and business disputes, including class actions related to the FCRA, FDCPA, TCPA and other consumer protection statutes.

Photo of Stefanie Jackman Stefanie Jackman

Stefanie devotes her practice to assisting financial services institutions facing state and federal government investigations and examinations, counseling them on complex compliance issues, as well as defending them in individual and class action lawsuits. Stefanie represents clients across the financial services industry, including…

Stefanie devotes her practice to assisting financial services institutions facing state and federal government investigations and examinations, counseling them on complex compliance issues, as well as defending them in individual and class action lawsuits. Stefanie represents clients across the financial services industry, including banks and nonbanks, mortgage banking lenders and servicers, debt collectors and buyers, third-party service providers, health care and medical revenue cycle service providers, credit and prepaid card companies, auto lenders, and fintechs. She regularly advises her clients on issues arising under an array of federal and state consumer financial laws, including UDAP/UDAAP statutes, the FDCPA, FCRA, TCPA, EFTA, SCRA, and TILA.

In addition to her litigation and government investigations work, Stefanie focuses a significant portion of her practice on providing compliance-related advice to her clients. She regularly counsels clients on conducting compliance assessments relating to their debt collection, credit reporting and dispute resolution processes, fair lending and underwriting, and vendor oversight, as well as the functionality of their overall compliance management system. Stefanie also brings her litigation and enforcement experience to bear in assisting clients in designing new products and processes, including product structuring, advertising, online application flows, underwriting, and servicing-related strategies.

Photo of James Kim James Kim

James advises fintechs, banks, investors, and other clients regarding federal and state consumer financial laws and regulations, including Title X of the Dodd-Frank Act (UDAAP), TILA, RESPA, EFTA, and the FCRA. He helps clients navigate examinations and investigations with the Consumer Financial Protection…

James advises fintechs, banks, investors, and other clients regarding federal and state consumer financial laws and regulations, including Title X of the Dodd-Frank Act (UDAAP), TILA, RESPA, EFTA, and the FCRA. He helps clients navigate examinations and investigations with the Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC), Federal Reserve Board, Federal Trade Commission (FTC), and various state agencies.

James also assists clients with product development, regulatory due diligence, and matters involving cutting-edge issues, such as financial technology, data aggregation, credit and prepaid cards, and marketplace lending.

James served as a senior enforcement attorney with the CFPB, where he coordinated with the FTC, Office of the Comptroller of the Currency, FDIC, Federal Communications Commission, and state attorneys general. He was lead counsel in the CFPB’s first enforcement actions involving mobile payments, and a member of an interdepartmental credit card/prepaid card/emerging payments issue team.

James is highly rated by Chambers USA, which uses client and peer feedback to list top attorneys in private practice. As one client told Chambers in 2021: “James is excellent. He came from the CFPB so he has the insider knowledge…He has a very strong background in enforcement and supervision matters, a very quick turnaround time and meets the deadline every single time.”

Photo of Alan D. Wingfield Alan D. Wingfield

Alan Wingfield is a partner in the firm’s Consumer Financial Services practice, with a focus on Financial Services Litigation and consumer law compliance counseling. Alan has represented businesses in many venues nationally in class action and individual consumer litigation. Alan’s practice includes compliance…

Alan Wingfield is a partner in the firm’s Consumer Financial Services practice, with a focus on Financial Services Litigation and consumer law compliance counseling. Alan has represented businesses in many venues nationally in class action and individual consumer litigation. Alan’s practice includes compliance counseling to help businesses with the myriad federal and state consumer protection laws and laws regulating financial services companies.