CFPB considering role in consumer investment arena


According to media reports, CFPB Director Cordray has indicated that the Bureau is considering whether it should take on a role in helping consumers manage their retirement investments and looking at its authority in this area.

The CFPB’s authority to deal with consumer investments is murky so we’re glad to see that Director Cordray appears to recognize the need for the CFPB to carefully examine its authority before moving into the investment arena.  The Dodd-Frank Act contains several exclusions from the CFPB’s jurisdiction that would significantly limit its authority to deal with investments. Those exclusions include persons regulated by state insurance regulators, employee benefit and compensation plans, persons regulated by a state securities commission or the SEC, and accountants engaged solely in customary and usual accounting activities such as advisory services.

At the same time, one of the duties Dodd-Frank assigned the Bureau’s Office of Older Americans is to monitor certifications or designations of financial advisors who serve seniors and alert the SEC and state regulators of certifications or designations that are identified as unfair, deceptive or abusive. The Office is also charged with supporting the development of programs that provide financial counseling to seniors on issues including long-term savings and later-life economic security. (To assist the CFPB in those duties, the Bureau issued a request for information in June 2012 that sought comment on a series of questions.)

Since one of the CFPB’s most worthwhile Dodd-Frank mandates is to help older Americans avoid financial exploitation, we hope the CFPB will fulfill its duties related to retirement investments made by seniors. However,  we question whether a broader initiative in the area of consumer investments is  an appropriate or needed role for the CFPB.


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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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