Attorneys with clients in consumer financial services know that regulatory, enforcement, and economic factors are always changing – and that means there is always something new on the horizon. With a new government on deck for 2021 and the COVID-19 pandemic firmly in control of the economy, there has never been a better time to get an update from insiders.
Danielle Bersofsky Cohen, Senior Program Attorney at the Practicing Law Institute (PLI), spoke about the upcoming 25th annual Consumer Financial Services Institute. This popular two-day program, scheduled to take place via live webcast December 7-8, features representatives from the faculties of federal and state regulatory and enforcement agencies, seasoned defense lawyers and in-house attorneys, and consumer advocates.
The Trump administration brought changes in the leadership and priorities of the CFPB, FTC, OCC and FDIC, as well as the federal banking agencies. What are some of the biggest changes practitioners should be aware of in this area?
The Consumer Financial Protection Bureau (CFPB) has changed its focus on solving other problems through oversight rather than enforcement. It has also focused on outright violations rather than using its Unfair, Misleading, or Abusive Acts or Practices (UDAAP) authority to create new requirements that are not expressly stated in laws or regulations. The Office of the Currency Verifier (OCC) and the Federal Deposit Insurance Corporation (FDIC) have taken a more bank-friendly approach, just as they seem to have used their powers under the National Bank Act (NBA) / Federal Deposit Insurance Act (FDIA) less aggressively having been with their enforcement agency.
What is likely to change in the first few months of the in-depth Biden administration?
The leadership of the CFPB and the OCC will fall under democratic control, so that is where the effects of change will be felt most directly. We will find out over the next few months how the party balance between the commissioners of the Federal Trade Commission (FTC) and the FDIC will change.
All agencies may take a more aggressive approach to enforcement, especially in the area of fair lending. It is expected that the CFPB will attempt to restore the ability to repay provisions in the Small Dollar Lending Rule. The CFPB could also try to make the recently concluded collection rule more consumer-friendly. It is also possible for the CFPB to begin an installment lender supervision course.
How has COVID-19 affected the industry?
The pandemic has resulted in the financial services industry generally taking a more conservative approach to implementing new products and other changes due to the combination of economic uncertainty and staffing constraints. This has also led to new requirements in the Fair Credit Reporting Act.
Overall, we have seen an increase in government regulatory and enforcement activity, possibly in response to a perceived lack of activity at the federal level.
What are the main areas where the risk of private litigation, including class actions, remains high?
The Act on Fair Collection Practices, the Telephone Consumer Protection Act and the Act on Fair Credit Reports are still widespread. There is likely to be more litigation against creditors, especially mortgage lenders, if the economy continues to be challenged. In this year's program, we will again hear from leading consumer advocates about the cases they have been working on and their future litigation priorities.
What should lawyers know about technological innovations like blockchain and its impact on the industry?
Technological developments such as the use of alternative data and the increasing importance of online and mobile app customer experiences pose new challenges, including unfair or misleading acts or practices (UDAP), UDAAP and privacy issues. Our program deals with the interface between new technologies and new products and existing legal frameworks.
What makes the PLI conference unique?
This is the 25th year PLI has hosted this conference which has become known as the leading CLE program in consumer financial services in the country thanks to our exceptional faculty representing a wide range of perspectives. This year's event kicks off with a keynote address by former CFPB Director Richard Cordray, who just before the pandemic broke out in the United States, he wrote a book entitled Watchdog: How Consumers Can Protect Our Families, Our Economy and Our Democracy. We will also be offering a brand new hour long panel that will look at diversity and inclusion / elimination of bias issues in the legal workplace (an hour of this type of credit is offered) and we will continue to offer a full hour of Ethics Credit as well.
Click here to learn more and to register for the 25th Annual Consumer Financial Services Institute.
The Practicing Law Institute is a non-profit learning organization dedicated to keeping lawyers and other professionals at the forefront of knowledge and expertise. PLI was chartered by the regents of the University of New York State and founded in 1933 by Harold P. Seligson. The organization offers high quality, accredited, ongoing legal and professional development programs in a variety of formats offered by more than 4,000 voluntary schools, including prominent lawyers, judges, investment bankers, accountants, business consultants, and US and international government regulators. PLI publishes a comprehensive library of papers, course manuals, answer books and journals, which are also available on the PLI PLUS online platform. The essence of PLI's mission is commitment to the pro bono community. Watch the upcoming live webcasts from PLI here.