To keep you informed of recent activities, below are several of the most significant federal and state events that have influenced the Consumer Financial Services industry over the past week.
Federal Activities:
On December 30, the court issued another significant decision in the ongoing battle over the fate of the Consumer Financial Protection Bureau (CFPB). In National Treasury Employees Union (NTEU) v. Vought, the U.S. District Court for the District of Columbia granted the plaintiffs’ motion to clarify the existing preliminary injunction and squarely rejected the Department of Justice Office of Legal Counsel’s interpretation of the CFPB’s funding statute. In so holding, the ruling makes clear that the CFPB cannot justify noncompliance with the court’s existing preliminary injunction by declining to request funds from the Federal Reserve. For more information, click here.
On December 30, the CFPB released its December 2025 annual report of credit and consumer reporting complaints, analyzing how the nationwide consumer reporting agencies (NCRAs) respond to consumer complaints about inaccurate credit reporting where consumers have already tried to dispute errors directly with the bureaus. Drawing on CFPB complaint data from January 2024 through June 2025 (with historical context back to 2020), the report notes that out of more than 5.6 million complaints received, nearly 4.8 million concerned credit and consumer reporting and roughly 3.9 million involved the three NCRAs, with NCRA complaint volume up nearly 3,000% since January 2020. About 52% of NCRA complaints during the period met the statutory definition of “covered complaints” under FCRA Section 611(e), and these covered and uncovered complaints grew at roughly similar rates, with a spike in covered issues in early 2025. Since 2021, NCRAs have shifted away from predominantly administrative responses toward more closure responses, but the report shows all three NCRAs rely heavily on highly standardized, frequently repeated explanations, with frequent “near-identical” responses identified by the CFPB. The report also highlights that average response times have lengthened, and in recent months all three are averaging more than 50 days — against a backdrop of rapidly rising complaint volumes driven by increased consumer use of the process, third-party submitters, and emerging technologies such as large language models and AI agents, prompting the CFPB to consider reforms to improve the complaint system and the usefulness of the resulting data. For more information, click here.
On December 30, the Federal Deposit Insurance Corporation (FDIC) announced enhancements to its public website to increase transparency around the marketing and sale of failing financial institutions, including new and updated content in the Resolutions section and the posting of sample contractual templates for potential acquirers. The updates, which apply to all FDIC‑insured institutions and certain nonbank entities, reflect lessons learned from the 2023 bank failures and are intended to improve the bidding process, including for nonbank asset bidders and “alliance bids” where multiple bidders combine resources. The FDIC revised pages covering franchise sales, acquisition overview, alliance bidding, transaction types, loan pools offered prior to failure (a new page), and loan sales, and it added sample document templates such as purchase and assumption agreements, confidentiality agreements, and a range of loan sale and financing documents (e.g., loan sale agreements, financing term sheets, purchase money notes, security agreements, and global notes). These templates, which may be updated over time and can differ from final transaction documents, are meant to allow prospective bidders to review standard forms in advance of resolution opportunities. For more information, click here.
On December 30, the Office of the Comptroller of the Currency (OCC) proposed amendments to its OCC Guidelines Establishing Heightened Standards for Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches that would raise the asset threshold for “covered banks” from $50 billion to $700 billion in average total consolidated assets, thereby limiting the prescriptive risk governance and board-oversight standards to only the largest and most complex institutions while generally excluding others unless they are highly complex, present heightened risk, or share a parent with a covered bank. The proposal, issued as a notice of proposed rulemaking with comments due March 2, 2026, is intended to reduce regulatory burden, allow excluded institutions to tailor risk-governance frameworks to their own size and risk profile, and enable the OCC to reallocate supervisory resources toward firms that pose greater systemic risk, while maintaining expectations that all institutions adhere to safe and sound practices and other applicable safety-and-soundness standards. The OCC also proposes clarifying and updating compliance date provisions, making conforming and technical changes, and seeks extensive public comment on whether additional revisions to the guidelines are warranted: including whether any aspects should continue to apply to excluded institutions, how to further tailor or streamline standards, whether a different threshold or inflation adjustment should be used, and whether portions of the guidelines duplicate or should be coordinated with the Federal Reserve’s enhanced prudential standards. For more information, click here.
On December 30, the OCC issued a notice of proposed rulemaking to amend its real estate lending and investment regulations for national banks and federal savings associations to codify their longstanding authority to establish and maintain real estate lending escrow accounts and to clarify that the terms and conditions of those accounts are business decisions to be made by each bank in its discretion, subject to safe and sound banking principles and existing legal requirements. The proposal, which would add definitions of “escrow account” to 12 CFR parts 34 and 160 and explicitly recognize escrow powers as part of banks’ broad real estate lending authority under the Federal Reserve Act, Home Owners’ Loan Act (HOLA), and the National Bank Act, is intended to reduce legal uncertainty and support continued use of escrow accounts as a risk-mitigation and budgeting tool in mortgage lending without imposing new reporting or compliance mandates. Any comments are due by January 29, 2026. For more information, click here.
On December 30, the OCC proposed a preemption determination concluding that federal law preempts state interest-on-escrow laws that eliminate OCC‑regulated banks’ flexibility to decide whether and to what extent to pay interest or other compensation on funds held in real estate escrow accounts or to assess related fees, thereby clarifying that such terms are matters of federal banking power and bank business judgment rather than state mandate. Relying on the National Bank Act (and, by extension, HOLA) and the Barnett/Cantero conflict‑preemption standard, the OCC proposes to find New York’s Gen. Oblig. Law § 5‑601 preempted and to extend that determination to substantively equivalent laws in California, Connecticut, Maine, Maryland, Massachusetts, Minnesota, Oregon, Rhode Island, Utah, Vermont, and Wisconsin, as well as any similar future state enactments, and to codify these conclusions in new 12 CFR 34.7. The agency emphasizes that these state requirements materially interfere with national banks’ and federal savings associations’ ability to structure escrow accounts efficiently and exercise federally granted discretion over pricing and product design, and invites public comment on the proposal, including whether additional state laws should be treated as substantively equivalent, by January 29, 2026. For more information, click here.
On December 29, the Securities and Exchange Commission (SEC) announced the retirement of Cicely LaMothe, deputy director of the Division of Corporation Finance, marking the end of a 24-year career in which she held multiple senior leadership roles and most recently served as deputy director for disclosure operations and acting director prior to Jim Moloney’s appointment. Over her tenure, LaMothe significantly advanced regulatory transparency and oversight, including issuing more than 25 new and updated compliance and disclosure interpretations on topics such as clawbacks, de-SPAC transactions, and Rule 10b5-1, Staff Legal Bulletin 14M on Rule 14a-8, and seven staff statements on fast-evolving crypto issues. She also helped shape commission policy on matters such as the acceleration of registration statements with mandatory arbitration provisions, concept releases involving foreign private issuers and asset-backed securities, expanded accommodations for draft registration statements to support capital formation, and modernization of the division’s disclosure review processes to enhance efficiency and effectiveness. For more information, click here.
On December 29, the FDIC finalized amendments to its rules on the establishment and relocation of branches and offices for FDIC‑supervised banks, streamlining the filing process by eliminating certain application content and public notice requirements, shortening approval timelines, expanding expedited processing, and formally excluding de minimis address changes from filing requirements. Effective February 27, 2026, the rule allows eligible institutions to have most branch and intrastate main office relocations deemed approved within three business days of a complete letter filing, removes newspaper publication and related public comment and hearing procedures (while requiring reasonable advance written notice to affected customers), and extends the expiration of approvals from 18 to 24 months. The rule also clarifies key definitions (including “branch,” “remote service unit,” “de novo interstate branch,” and “intrastate main office relocation”) and aligns procedures for relocating insured branches of foreign banks, with the FDIC expecting the changes to reduce regulatory burden and increase speed and certainty while maintaining its ability to evaluate statutory and CRA factors. For more information, click here.
On December 29, the National Credit Union Administration (NCUA) proposed a rule to streamline its advertising and insured-status regulations by eliminating the requirement that federally insured credit unions include a prescribed “official advertising statement” (e.g., “Federally insured by NCUA”) in most advertisements, while leaving unchanged the longstanding requirement to display the official NCUA insurance sign in branches, on websites, and in other key locations. The proposal would delete 12 C.F.R. § 740.5 and revise the scope provision in § 740.0 to focus on accurate advertising and required signage, with the board concluding that the detailed text, font, and exemption rules for the advertising statement impose unnecessary compliance burden and have limited incremental benefit given existing requirements for truthful ads and prominent signage. Federally insured credit unions could still use an advertising statement voluntarily so long as it is not misleading, and the NCUA characterizes the change as deregulatory and not expected to have significant impact on small credit unions or require new paperwork. Comments on the proposal are due by February 27, 2026. For more information, click here.
On December 29, NCUA proposed amendments to its catastrophic act reporting rule for federally insured credit unions that would extend the deadline to notify the agency of a qualifying disaster from five business days to 15 calendar days, allow reports to be made generically to “NCUA” rather than to a specific regional director, and replace the existing prescriptive list of information to be documented with a more flexible requirement that the credit union prepare a record containing the basic facts of the event. The proposal, which retains the existing definition of a “catastrophic act” as a disaster (natural or otherwise) that causes physical damage or interrupts vital member services for more than two consecutive business days, is intended to reduce compliance burden and administrative detail so institutions can prioritize stabilization and recovery while still ensuring the agency receives timely, essential information for safety and soundness oversight. Comments are due by February 27, 2026. For more information, click here.
On December 29, NCUA proposed a rule to amend its regulations on loans to other credit unions by removing § 701.25(b), which currently requires federal credit union boards (and, via cross-reference, federally insured state-chartered credit union boards) to formally approve and adopt written policies setting aggregate and single-borrower limits for such loans, concluding that this provision is redundant of statutory requirements and overly prescriptive. Under the proposal, federal credit unions would still be subject to the underlying statutory authority governing loans to credit unions and to the remaining limits and conditions in § 701.25, while federally insured state-chartered credit unions would continue to follow applicable NCUA and state law, but boards would have greater discretion to determine if and how to formalize approval policies based on their own risk profiles. NCUA characterizes the change as deregulatory, expects it to reduce documentation and policy burdens without undermining safety and soundness, and is seeking public comment on the proposal by February 27, 2026. For more information, click here.
On December 29, NCUA proposed a rule to amend its suretyship and guaranty regulation by removing the segregated deposit and collateral requirements that currently obligate federally insured credit unions to maintain 100–110% collateral when acting as a surety or guarantor, thereby giving institutions greater flexibility to structure these arrangements based on their own risk management and lending frameworks. The proposal would retain the core conditions that a federal credit union’s obligation under a surety or guaranty agreement be limited to a fixed dollar amount and specified duration and that any performance under the agreement must result in an authorized loan that complies with applicable lending limits and regulations, while relying on existing commercial lending and safety-and-soundness standards (and, for state-chartered institutions, applicable state rules) to govern collateral expectations. NCUA characterizes the change as deregulatory and aimed at reducing complexity and compliance burden, while preserving protections for the National Credit Union Share Insurance Fund. Comments are due by February 27, 2026. For more information, click here.
On December 29, PYMNTS reported that the Financial Accounting Standards Board (FASB) has placed two digital asset–related projects among the first items on its 2026 technical agenda, focusing on whether certain digital assets should be classified as cash equivalents and how to account for transfers of digital assets. Building on projects added by the FASB chair in August and formalized by the board in October and November updates, the standard setter will consider clarifying when specific digital assets can meet the definition of cash equivalents and will address accounting for arrangements involving wrapped tokens, receipt tokens, and derecognition questions tied to when control of a crypto asset has been transferred. Both projects were elevated from the research agenda in response to feedback from FASB’s annual agenda consultation and recommendations from the President’s Working Group on Digital Asset Markets, signaling that new authoritative guidance on digital asset classification and transfer accounting could emerge from the board’s 2026 deliberations. For more information, click here.
On December 23, the CFPB issued an advisory opinion under Regulation Z clarifying that certain “covered earned wage access (EWA)” products are not “credit” for Truth in Lending Act purposes and that, where any EWA product does constitute credit, expedited delivery fees and tips generally are not “finance charges” if they are not imposed by the provider. The CFPB defines covered EWA as products that advance no more than the accrued cash value of a worker’s earned but unpaid wages based on payroll data, are repaid solely through a single payroll‑process deduction at the next payroll event, provide no contractual or legal recourse against the worker (including no debits from regular transaction accounts, no collection activity, no sale/placement of the obligation as a debt, and no credit reporting), and do not involve assessing the worker’s credit risk. The bureau explains that these arrangements function as early wage payment rather than extensions of debt, and thus fall outside Regulation Z’s “credit” definition, and further concludes that expedited delivery fees and tips associated with EWA are ordinarily fees for optional delivery speed or voluntary gratuities rather than costs “imposed” as a condition of credit, though in specific fact patterns they could become finance charges. The advisory opinion, effective immediately, also withdraws a 2024 proposed interpretive rule that would have treated EWA more broadly as credit, and supersedes earlier CFPB positions while reaffirming that providers relying in good faith on this interpretation are protected from certain TILA liabilities. For more information, click here.
On December 22, NCUA released a compilation of AI resources to help credit unions evaluate, implement, and oversee AI technologies and third-party AI vendors, emphasizing both opportunities and risks related to member service, efficiency, and safety and soundness. The publication highlights NCUA’s existing third-party due diligence guidance (07-CU-13 and 01-CU-20) and directs credit unions to external frameworks and tools, including the National Institute of Standards and Technology’s AI resources for governance and trustworthy AI, the Committee of Sponsoring Organizations of the Treadway Commission’s paper on integrating AI into enterprise risk management, and multiple Cybersecurity and Infrastructure Security Agency resources addressing AI data security and secure deployment of externally developed AI systems. It also references the U.S. Treasury’s report on AI in financial services, which discusses privacy, bias, consumer protection, and concentration risks, and FinCEN’s guidance on deepfake-enabled fraud, providing red flags and best practices to strengthen identity verification and fraud monitoring. Collectively, these materials are intended to support credit unions in managing model risk, data protection, fair lending compliance, operational resilience, and fraud risks as they adopt or scale AI solutions. For more information, click here.
On December 22, the Federal Trade Commission (FTC) warned businesses about the use of fake online reviews, reminding them that creating, buying, or posting deceptive reviews, or offering incentives for only positive reviews can lead to enforcement actions and financial penalties. The FTC explained that reviews play a critical role for both consumers and legitimate companies, and that fake reviews harm people who rely on honest feedback as well as businesses that compete fairly. In recent warning letters, the agency urged companies to scrutinize their existing reviews and remove any misleading statements, and it advised consumers to look at multiple sources, note whether reviews are independent or sponsored, watch for sudden bursts of reviews that may signal fakery, and report suspicious reviews both to the hosting platform and to the FTC. For more information, click here.
State Activities:
On December 23, New York Attorney General Letitia James announced a settlement securing approximately $2.4 million in debt relief and $175,000 in penalties from Monterey Finance, a financial services company that allegedly misled consumers by disguising costly lease agreements as traditional financing, causing hundreds of New Yorkers to pay fees and monthly charges that often exceeded 200% of the sticker price for products and services they believed they were buying outright, including family pets and wedding dresses. The attorney general’s investigation found that Monterey’s contracts layered fees at the beginning and end of lease terms, imposed illegal “pay‑to‑pay” fees, threatened consumers with repossession or referral to a fictitious legal department, and in some cases urged struggling borrowers to surrender pets to shelters, all while refusing to allow returns of items or services with no residual value, such as car repairs. Under the settlement, Monterey must cancel all of its leases in New York, permanently cease collecting on any lease‑originated debt, request that credit reporting agencies remove negative credit information tied to these leases, and is barred from involvement in leases for services, pets, and other goods that lack clear resale value. For more information, click here.
On December 19, New York Governor Kathy Hochul signed Senate Bill S1353A creating a new General Business Law article on “actions involving coerced debts.” The law is aimed squarely at survivors of domestic violence, trafficking, and other forms of economic abuse who find themselves saddled with credit card balances, loans, or other consumer debts they never truly agreed to incur. Once effective (90 days after signing), it will prohibit creditors from enforcing certain coerced consumer debts against victims, create a structured process for disputing those debts, and establish robust private rights of action and defenses against collection. New York becomes the eighth state to enact protections of this kind. For more information, click here.
On December 12, Wisconsin legislators introduced Senate Bill 759, which would substantially shift Wisconsin’s approach to consumer lending. The bill would impose a 36% annual percentage rate (APR) cap on consumer loans made by licensed lenders; adopt predominant economic interest and totality of the circumstances tests that expand which entities “make” loans under the law and are subject to licensing; add broad anti‑evasion language; and require new, detailed reporting from licensed lenders to the Division of Banking within the Department of Financial Institutions. For more information, click here.