On June 17, 2022, the CFPB released an article, authored by Director Rohit Chopra, about how CFPB is seeking to move away from highly complicated rules towards simpler and clearer rules. The CFPB director believes that “markets work best when rules are simple, easy to understand, and easy to enforce.”
According to the article, the CFPB aims to more clearly communicate the agency’s expectations in simple and straight-forward terms, which will produce more durable guidance and rules. The initiative, which was included in Chopra’s Semiannual Report to Congress in late April 2022, has the following benefits according to the CFPB director.
Eliminating unnecessarily complex guidance and rules will strengthen the compliance posture of all market participants, not just larger market players who can afford high-priced lawyers.
Simple bright-lines allow all parties to better understand the law and policy priorities as well as prevent strategic or intentional “misunderstanding” or plausible deniability that some companies use to disregard the law.
Clarity and simplicity will promote consistency among government agencies that enforce federal consumer financial law.
The agency is heavily focused on implementing longstanding Congressional directives which have gone ignored. These include rulemakings related to consumer access to their financial records, increasing transparency in the small business lending marketplace, and implementing regulations for quality control standards for automated valuation models. In addition, the agency is also reviewing rules that they have inherited from other agencies. Many of these rules have now been tested in the marketplace for many years and are due for review. These include:
Rules originally developed by the Federal Reserve under the Credit CARD Act of 2009.
Rules originally developed by the FTC to implement the FCRA in an effort to identify potential enhancements and changes in business practices.
The CFPB’s Qualified Mortgage Rules to explore ways to spur streamlined modification and refinancing in the mortgage market.
The CFPB also says that they are dramatically increasing the amount of guidance it is providing to the marketplace.
Read the full CFPB’s blog post here.