On January 5, 2021, the Consumer Financial Protection Bureau (CFPB or Bureau) Taskforce on Federal Consumer Financial Law (Task Force) released a report (Report) recommending changes designed to contemporize and strengthen consumer financial protections, encourage competition and innovation, and improve inclusion and access. The Report is the product of months of study and public outreach by the Task Force, which was charged with evaluating the current legal and regulatory environment for both consumers and financial services providers and providing recommendations for improvement.
In October 2019, the CFPB established the Task Force of external experts as an independent body within the CFPB that reported to Director Kraninger. In April 2020, the CFPB published a request for public comments to help identify areas for Task Force focus. According to the Task Force’s charter, the charter will expire 90 days after completion of the Report, unless renewed. The Report was issued in two volumes. Volume I covers the context of consumer finance and its current regulation. Volume II contains the Task Force’s recommendations.
The Task Force Report tracks the development of consumer demand for credit. Specifically, the Report focuses on the importance of the small-dollar lending market, which is an outgrowth of substantial demand for credit among lower-income individuals. Typically, these individuals face substantial barriers when attempting to access mainstream consumer credit. Thus, the purpose of consumer financial protection laws is to balance consumer protection with the reality that overregulation may limit credit access for many borrowers. Currently, the status quo relies on a patchwork of federal and state-specific consumer financial regulations that may overburden creditors and decrease credit access. To encourage financial inclusion, privacy, and innovation, the Task Force recommendations center on streamlining and improving upon the current framework.
The Task Force Report includes the following recommendations to the CFPB, Congress, and state and federal regulators.