2013 Poised for Better Consumer Advocacy, says CFPB
The Consumer Financial Protection Bureau, as you may know, was put into place as part of President Obama’s CARD Act. It’s been alive and kicking for going on three years. It was put into place as a way to hold banks and the financial sector as a whole more accountable. And as you may also know, CFPB recently was able to hold three of the biggest credit card companies in the nation responsible for policies not in line with transparency and accuracy. Those companies, Capital One, Discover and American Express, as currently in the process of paying out the fines and ideally making much needed changes in their respective policies. But that’s not all CFPB has been able to do.
Richard Cordray, who is the agency’s director, had reported a few months ago that his agency has had fewer complaints than it had initially anticipated and each month, those numbers continue to drop as claims are processed, investigated and resolved. He said then – and reiterates now – that there has been a steady decline in consumer complaints since the bureau was officially brought online.
Once these guidelines were in place that made the credit card sector a bit more predictable, the bureau moved on to other areas, including mortgages, student loans and payday loans. And now, in all of those sectors, the bureau is seeing great strides being made. So now that the lines have been drawn in the sand, we were wondering what lies on the horizon.
In a new report that outlines the progress, Rich Cordray, who is the agency’s director, had a message for readers.
One of our most significant responsibilities has been to address problems in the mortgage market. During fiscal year 2012, we proposed rules aimed at providing clearer rules of the road, which will be finalized by January of 2013. Further, for the first time, we have the authority to supervise both banks and nonbank firms engaged in the mortgage market to assure that the rules are being applied evenhandedly.
He goes on to say he and his agency are working diligently ensure fairer laws. By using tools such as supervision and enforcement efforts, it’s his belief 2013 will be even better for CFPB. He said that in 2012, “exemplary enforcement actions” had been taken. By partnering with the Office of Comptroller of the Currency and the Federal Deposit Insurance Corporation, the government agencies are better able to address deceptive marketing efforts or those that outright lie about what they offer and can guarantee. The result so far?
The collective results were to put $350 million back in the pockets of five and a half million consumers, along with assessing $74 million in penalties as a deterrent to such activities in the future.
So how does filing a complaint actually work? According to Cordray,
Once a consumer contacts us, we work with both the consumer and his or her financial institution to help resolve the issue. For many consumers, we are able to get some financial relief. For others, we often can secure other kinds of meaningful relief, such as clearing up errors, correcting misinformation on credit reports, and providing timely advice on how to address particular issues.
Priority determinations are based on demand. For instance, mortgage loans had the attention and focus of the collective bureau in 2012 because there were more consumers who needed help with their lenders. Currently, efforts are being made to write new guidelines that would better protect homeowners in the future. A few of those recommendations include more detailed monthly statements, including specific information on payments, interest rates and balances. Still, the bureau keeps a lot of irons in the fire, so to speak and were another sector begin to falter, attention is turned to those areas in order eliminate those weaknesses.
Congress recently heard from CFPB, too. Cordray reported that he would be prepared to present findings from new research that could provide insight into mortgages, student loans and even credit cards. Even when consumer complaints begin dropping, the bureau continues to watch for those tell tale signs that could equate to big trouble.
Finally, Cordray revealed there could be advisory groups within the CFPB in the near future. The Consumer Advisory Board works with law enforcement, banks, card networks and community leaders. The Community Bank Advisory Council will advise on market impact for any number of financial products. The Credit union Advisory Council monitors those products exclusive to credit unions. The Academic Research Council will serve as back up for the bureau as it seeks to strengthen the foundation.
Have you filed a complaint with CFPB? If so, let us know about your experience. Was it resolved? Did you hear from your credit card company following the complaint?