The Consumer Financial Protection Bureau and CDCUs
This article was written by Cliff Rosenthal, Assistant Director of Consumer Education and Engagement at CFPB’s Office of Financial Empowerment and former CEO of the Federation, to identify CFPB regulations and resources that can be helpful to credit unions.
Community development credit unions have a distinctive relationship with the CFPB, which was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) of 2010 in response to the financial crisis. The CFPB has the authority to write rules that, in many cases, apply to banks, credit unions, and non-depository institutions alike. As some examples, the CFPB can issue regulations relating to mortgage origination and servicing, debt collection, prepaid cards, and remittance transfers. Many credit unions are subject to one or more of these rules. But unlike other regulators that focus on the safety and soundness of financial institutions first, the CFPB focuses primarily on consumers. However, the CFPB generally does not supervise credit unions with $10 billion or less in assets – a category that includes all CDCUs.
The Bureau has crafted many of its new mortgage regulations to allow exceptions for small institutions – and the great majority of CDCUs are small. Most prominently, there are special flexibilities available to small creditors under the Ability-to-Repay (or Qualified Mortgage) rule. Exemptions from certain provisions of the mortgage servicing rules are also available for many institutions servicing 5,000 or fewer mortgage loans. Credit unions can find a complete description of these exceptions at consumerfinance.gov/regulatory-implementation. There are certain exemptions that take into account the focus that CDCUs have on making responsible, affordable credit available to underserved populations. For instance, credit unions certified by the Community Development Financial Institutions (CDFI) Fund of the U.S. Treasury Department are exempt from the requirements under the Ability-to-Repay rule, because they meet the Fund’s standards for providing affordable, responsible credit to low-income and underserved markets.
While credit unions may be most familiar with the regulatory role of CFPB, they may be less familiar with the valuable resources that the CFPB can offer to help all consumers improve their financial lives. The CFPB can be a valuable partner to CDCUs in fulfilling their mission of serving low-income members.
CDCUs often serve as a trusted resource for their members on financial issues that involve other companies or financial issues. If members are having problems with a consumer financial product or service, they can submit a complaint to the CFPB. Since 2011, the Bureau has handled more than 270,000 consumer complaints about financial products and services, including credit cards, student loans, mortgages, credit reports, and other consumer financial products and services. It forwards those complaints to the appropriate company, and works to get consumers a response. Credit union members can submit a complaint at consumerfinance.gov/complaint or by calling (855) 411-CFPB (2372) (TTY/TDD number: (855) 729-2372).
If members need basic, straightforward information about financial products, services, and their rights as consumers, there is another important resource they should know about: Ask CFPB. The Bureau’s site has more than 1,000 common questions and plain-language answers on a wide range of topics. Shopping for a mortgage? Want to know how to get an error in a credit report corrected? Concerned that your Social Security payment may have been garnished wrongly? More than one million visitors to the site have gotten answers to these and many more questions, by visiting consumerfinance.gov/askcfpb. If the site does not have an answer to a question from a consumer, it can be submitted to the CFPB to be researched and posted for future users. Consumers can also get answers to questions about consumer financial products by calling (855) 411-CFPB (2372). Our U.S.-based contact centers provide services to consumers in more than 180 languages and to consumers who are deaf, have hearing loss, or have speech disabilities (TTY/TDD number: (855) 729-2372).
The CFPB has a number of special-population offices whose mission intersects with that of CDCUs. Our Office of Financial Empowerment focuses on helping low-income and economically vulnerable consumers to achieve financial stability. CDCUs, which have been assisting these populations for decades, have provided us with valuable examples of both time-tested and innovative products and services to help their members establish and improve credit, borrow wisely and reduce debt, save for urgent and long-term needs, and increase their financial capability.
The Bureau’s other special-population offices also are important resources. CDCUs have begun working with the CFPB’s Office of Older Americans, which has produced and distributed resource materials to protect vulnerable members of this large and growing sector. For example, that office conducted a joint webinar with the Federation on Combating Elder Financial Abuse last year. The CFPB’s Office of Servicemember Affairs focuses on active and transitioning military members as well as veterans, who all face special financial challenges – and sometimes, special financial traps. Many CDCUs are located in areas with large numbers of servicemembers and retirees, and the Bureau can be an important resource for them. The Office for Students focuses on concerns including the enormous student debt load which many young people must manage, and it provides guidance on how to plan paying for college to incoming students.
CDCUs also serve as valued allies and advisors to the CFPB. The Dodd-Frank Act established the CFPB’s Consumer Advisory Board, for which a CDCU representative serves as vice-chairman. In addition, the CFPB established a Credit Union Advisory Council, which has many CDCU representatives. CDCUs should also know about the Office of Financial Institutions and Business Liaison, which is responsible for ensuring that CFPB incorporates the perspectives of financial institutions into our policy-making process. And of course, the Office of Financial Empowerment always is eager to hear about products, services, and experiences serving low-income consumers. We can be reached at email@example.com.
Our collaboration with CDCUs is off to a promising start. We look forward to deepening and extending it in the years to come.