Today, the Consumer Financial Protection Bureau (the “CFPB” or the “Bureau”) opens for business. One year ago, Congress passed and President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), including the Consumer Financial Protection Act, which created the CFPB. Now the CFPB will be “a cop on the beat” to enforce consumer financial protection laws, declare individual acts or practices to be “unfair, deceptive, or abusive,” and regulate nonbank and bank providers of consumer financial products and services.
The CFPB’s authority is sweeping and its ability to enforce laws, develop regulations, and supervise entities will have a profound impact on those providing nonbank financial products and services, including debt relief service providers (e.g., for-profit and taxable nonprofit debt management plan providers, tax-exempt nonprofit credit counseling agencies, and debt settlement service providers) and housing counseling agencies approved by the U.S. Department of Housing and Urban Development (“HUD”).
The CFPB transition team has been at work hiring over 400 staff, organizing its bureaucracy, an coordinating with other federal agencies and non-governmental entities. At the same time, the CFPB has been rolling out initiatives in a number of areas related to credit cards and mortgages. These early efforts have already touched on debt relief services. For example, the CFPB has targeted “debt relief services” for potential inclusion in an initial rule to define the scope of its supervisory authority for larger participants in certain nonbank markets and, at the same time, signaled that housing counseling service providers may be subject to automatic supervision.
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