Last week, the Consumer Federation of America, one of the most effective and respected consumer organizations in the country, hosted a conference in Washington, DC. I was honored when CFA invited me to speak at the conference because while we may not agree on all the details, The Financial Services Roundtable and its members are committed to treating consumers fairly and to delivering value to their customers every day.
The panel in which I participated was asked the question: “what should the Consumer Financial Protection Bureau’s (CFPB) priorities be?”
I offered four suggestions:
1. Plain Language. Nothing tears down the walls of misunderstanding and confusion faster than plain language, consumer financial disclosures, and agreements. Already, the CFPB has made significant progress toward this goal in developing several iterations of plain language mortgage disclosures and field testing those disclosures. We wholeheartedly support this work. Complicated disclosures have long been a thorn in the side of industry as well as consumers. I urge CFPB to issue plain language disclosures for mortgages and all other consumer financial services products.
2. Stop the Fraudsters. I urge the CFPB to make stopping financial fraud a priority. Every day, ruthless fraudsters are hard at work tricking consumers out of their money and their peace of mind with schemes that run the gamut from foreclosure prevention to get rich quick and getting out of debt. These criminals who increasingly operate in the dark corners of the Internet must be rooted out and put behind bars. The CFPB should partner with the banking regulators and other Federal and state regulators and law enforcement to put financial fraudsters out of business.
3. Lead with Regulation and Supervision. CFPB has the opportunity to build a new agency infused with the best of “what worked” at its predecessors. Experience shows that robust stakeholder input, combined with rulemaking under the Administrative Procedure Act and thoughtful supervision produces quality results for consumers and financial services companies. There’s no question that enforcement is a vital tool, but enforcement simply isn’t as effective as regulation and supervision in achieving compliance with consumer financial services law.
Achieving the right balance will require judgment and leadership at every level at the new agency.
4. Financial Literacy: There’s an App for That. Financial literacy is a little like the weather; everyone talks about it, creates materials, and holds classes, but we still have the equivalent of blizzards – millions of Americans who do not know how to manage their money. The CFPB is uniquely qualified to take financial literacy to a whole new level. A 21st century agency staffed with some of the most tech-savvy and consumer-focused people around, the CFPB should develop new ways to envision and deliver financial literacy, and do what Apple did, make people want to engage, make it easy, and available at every appropriate intersection.