Keeping Up With Change In Consumer Financial Services: Regulation, Enforcement, Litigation, And More

Lawyers with clients in the consumer financial services sector know that regulatory, enforcement, and economic factors are constantly shifting — and this means there’s always something new on the horizon. With a new administration on deck for 2021 and the COVID-19 pandemic keeping a tight grip on the economy, there’s never been a better time to get an update from insiders.

Danielle Bersofsky Cohen, Senior Program Attorney with Practising Law Institute (PLI), spoke about the upcoming 25th Annual Consumer Financial Services Institute. This popular two-day program, scheduled to take place via live webcast December 7–8, features as faculty representatives from federal and state regulatory and enforcement agencies, experienced defense and in-house counsel, and consumer advocates.

The Trump administration brought changes to the leadership and priorities of the CFPB, FTC, OCC and FDIC and federal banking agencies. What are some of the biggest changes that practitioners in this area should be aware of?

The Consumer Financial Protection Bureau (CFPB) has changed its focus to resolving more matters through supervision rather than enforcement. It has also focused on clear-cut violations instead of using its Unfair, Deceptive or Abusive Acts or Practices (UDAAP) authority to create new requirements not expressly found in statutes or regulations. The Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) have taken a more bank-friendly approach to how they have used their National Bank Act (NBA)/Federal Deposit Insurance Act (FDIA) authority, and also seem to have been less aggressive in the use of their enforcement authority.

What is expected to change in the first months of the incoming Biden administration?

The leadership of the CFPB and OCC will fall under Democratic control, so the effect of change may be felt most immediately there. We will find out in the next couple of months how the party balance will shift among the Federal Trade Commission (FTC) Commissioners and at the FDIC.

All agencies may take a more aggressive approach to enforcement, particularly in the area of fair lending. It is anticipated that the CFPB will try to reinstate the ability to repay provisions in the Small Dollar Lending Rule. The CFPB may also try to make the recently finalized Debt Collection Rule more consumer friendly. It is also possible the CFPB will embark on a course to supervise installment lenders.

How has COVID-19 affected the industry?

The pandemic has caused the financial services industry in general to take a more conservative approach to implementing new products and making other changes due to the combination of economic uncertainty and staffing constraints. It has also resulted in new Fair Credit Reporting Act requirements.

Overall, we have seen a rise in state regulatory and enforcement activity, perhaps as a reaction to any perceived lack of activity at the federal level.

What are the main areas in which the risk of private litigation, including class actions, remains high?

The Fair Debt Collection Practices Act, Telephone Consumer Protection Act, and Fair Credit Reporting Act all remain very much on the radar. There is likely to be more litigation against creditors, particularly mortgage lenders, if the economy continues to be challenged. At this year’s program we will again hear from leading consumer advocates about the cases they have been working on and their litigation priorities going forward.

What are some key things that attorneys should know about technological innovations like Blockchain and their effects on the industry?

Technological developments such as the use of alternative data and the increasing prominence of online and mobile-app customer experiences raise new challenges, including Unfair or Deceptive Acts or Practices (UDAP), UDAAP, and privacy issues. Our program looks at the intersection between new technologies and new products and existing regulatory frameworks.

What makes PLI’s conference unique?

This is the 25th year PLI will be offering this conference, which has become known as the premier consumer financial services CLE program in the country thanks to our exceptional faculty who represent a wide range of perspectives. This year’s event will commence with a keynote address by former CFPB Director Richard Cordray, who released a book shortly before the pandemic took hold in the United States titled Watchdog: How Protecting Consumers Can Save Our Families, Our Economy, and Our Democracy. We will also feature an all-new one-hour panel addressing diversity and inclusion/elimination of bias issues in the legal workplace (one hour of this type of credit will be offered), and we will continue to offer a full hour of Ethics credit as well.

Click here to learn more and to register for the 25th Annual Consumer Financial Services Institute.

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Practising Law Institute is a nonprofit learning organization dedicated to keeping attorneys and other professionals at the forefront of knowledge and expertise. PLI is chartered by the Regents of the University of the State of New York and was founded in 1933 by Harold P. Seligson. The organization provides the highest quality, accredited, continuing legal and professional education programs in a variety of formats which are delivered by more than 4,000 volunteer faculty including prominent lawyers, judges, investment bankers, accountants, corporate counsel, and U.S. and international government regulators. PLI publishes a comprehensive library of Treatises, Course Handbooks, Answer Books and Journals also available through the PLI PLUS online platform. The essence of PLI’s mission is its commitment to the pro bono community. View PLI’s upcoming live webcasts here.