What is the CFPB Consumer Financial Protection Bureau? Definition, Tips, Best Practices, and Compliance Challenges of the CFPB

Consumer Financial Protection Bureau Definition

The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government set up after the financial crisis of 2008 in order to protect the rights of consumers in the financial services industry. The CFPB has jurisdiction over areas including banks, credit unions, securities firms, debt collectors, foreclosure relief services, as well as other financial services firms based in the United States.

The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act introduced in response to the 2008 financial crisis authorized the creation of the NFPB which came into operation the following year. The primary aim of the CFPB is “to make consumer financial markets work for consumers, responsible providers, and the economy as a whole.” The CFPB strives to eliminate unfair and deceptive activities in the financial services sector by taking action against offending companies and also by arming consumers with the information and tools they need to protect themselves against such behaviors.

The CFPB’s Vision

The vision of CFPB is to develop a financial services sector in the United States that is characterized by transparency, fairness, and responsibility. Consumers will be able to view prices and risks as soon as they engage with a company and not further along the buyer’s journey. Deceptive business models and abusive practices will be eliminated.

The CFPB develops rules for the industry to follow. In addition they carries out the following measures to help make their vision a reality:

  • Financial Guidance: The CFPB provides financial guidance to consumers. For example, students and their parents are provided with financial guidance documents which outline all the financial aids available. This allows students and their parents to quickly compare the various options available and figure out which is most suited to their needs.
  • Retirement Resources: The CFPB shares informational materials on retirement planning which provide relevant tips specific to the situation encountered by the individual planning their retirement.
  • Home Ownership Help: The CFPB aids private individuals attempting to purchase a home. For instance, on their website their is a section which provides detailed info on interest rates as well as a monthly payments worksheet and a loan comparison tool to help consumers figure out which offers are best suited to their needs.

CFPB Compliance Best Practices

The scope of the CFPB is quite broad. Sometimes companies might not even realize how broad it is and, as a result, may end up failing to meet the rules set out by the CFPB. Non-compliance invariably results in costing your company financially as fines and penalties are imposed.

CFPB regulations can also apply to a financial service provider’s vendor – who acts as an extension of the service provider.

To help you avoid CFPB compliance failure, we have developed a set of best practices:

  • Assess Your Vendors: You should thoroughly inspect your vendors and ensure that they comply with CFPB regulations. The things you need to consider here are your vendor’s policies, procedures, and training. You might also need to rewrite the language on your vendor contracts to make sure it includes relevant information about CFPB compliance and how it is a non-negotiable.
  • Audit Vendors: Ensure you only deal with CFPB-compliant vendors by making it a requirement that they complete an audit prior to CFPB examination.
  • Leverage Speech Analytics: Speech analytics software can help you stay CFPB compliant. Research shows that nearly 12 million Americans are at least 30 days behind on credit card and other non-mortgage payments. As a result, financial firms are making a high volume of collection calls each month. The key here is they must maintain CFPB compliance while they make these calls. If they don’t they are subject to CFPB fines or even lawsuits. To maintain compliance, some companies conduct manual sampling of collection calls which does little to prevent non-compliant behaviors. However, there is a better way. The most progressive companies in the financial services industry today have started leveraging speech analytics software to track and analyze their collection calls and ensure CFPB compliance. Speech analytics software can monitor collection calls for Mini Miranda language, Right Party Contact language, FDCPA violations, abusive language from either party, and other risky language.
  • Monitor Your Agents: Another way to maintain CFPB compliance is to monitor your agents. Once again, speech analytics can be really helpful here. Speech analytics enable you to monitor 100% of your calls ensuring procedural compliance. As an added benefit, you will also be able to highlight the behaviors and language that lead to successful collections. This way Account Receivable Management (ARM) companies can share best practices for both CFPB compliance and successful collection calls across their organization.

Further Reading on CFPB Consumer Financial Protection Bureau

What is the Consumer Financial Protection Bureau?
Consumer Financial Protection Bureau – CFPB
How the Consumer Financial Protection Bureau Works

 

Join Tomio Narita of Simmonds & Narita Law Firm and David Cherner, Esq., Chief Compliance Officer of Northland Group, Inc., customer interaction analytics user, as they review the impact of consumer complaints, it’s relevance to CFPB compliance and how interaction analytics can support improved tracking and higher compliance behavior in your agent community.

In this webinar you will learn how various companies have used interactions analytics to:

  • Identify and track consumer disputes
  • Evaluate operational practices for compliance with legal/CFPB expectations
  • Identify and track consumer complaints
  • Forensically discover potentially problematic calls and research events
  • Reveal insights to provide targeted compliance coaching to agents
  • Dramatically improve overall compliance adherence and reduce complaints

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