Last week, I had the pleasure of attending the American Financial Services Association’s 2017 Annual Meeting. As I wrote on this blog before the meeting, this year’s theme seemed to be uncertainty. Several questions have been swirling around in lenders’ minds over the past year, and while I didn’t expect definite answers, I looked forward to discussions about the following:
- What will President Trump’s administration do (or not do) next in terms of addressing federal Fair Lending regulations?
- How can lenders best protect themselves during the “Data Breach Decade?”
- What will happen to the Consumer Financial Protection Bureau, and the CFPB’s controversial mandatory arbitration rule?
As it turns out, we actually got an answer during the meeting—although it wasn’t on the schedule. Just hours after CFPB Director Richard Cordray delivered a presentation to AFSA members, the Senate repealed the arbitration rule in a 51–50 vote. Director Cordray’s appearance at the meeting was already somewhat extraordinary—keep in mind that he was speaking in front of a room full of the CFPB’s critics and opponents—but the timing of the ruling made this year’s event one to remember.
That said, many members of the consumer finance industry see Congress’s decision as a somewhat symbolic victory. The CFPB’s rule would have only impacted the small number of companies liable to get involved in a class action dispute; most lenders are not large enough to worry about it, and have many other controls in place to reduce their legal risks.
Cordray, for his part, was a funny and engaging speaker. Numerous people in attendance, including AFSA members, the association’s principals, and members of the media, pressed the Director on his plans and possible future should he leave his post at the CFPB, but Cordray nimbly deflected. For someone who could lose his job at any moment, and who might have a series of tough political battles ahead, he was remarkably easygoing. Uncertainty, it seems, is a feeling he’s comfortable with.
And there may be other reasons for Cordray’s cheery disposition. Nearly a year into the Trump presidency, lenders have more or less concluded that compliance and regulation aren’t going away regardless of what happens with CFPB. In fact, the trend appears to be more regulations—not less—as an increasing number of state attorneys general are taking up the regulatory torch. Led by judges in New York, Pennsylvania, and California, states are stepping up enforcement of consumer finance regulations. In some jurisdictions, lenders face greater pressure than they did a year ago, thanks to the “mini CFPBs” that are emerging to take the place of the federal agency should it change or lose some enforcement and/or rulemaking authority.
At the same time, our industry faces a new set of challenges related to cybersecurity. The fallout from the Equifax breach and other recent cyberattacks has prompted lawmakers to consider passing increased consumer protections with a focus on data and privacy safeguards.
Audits are painful but useful.
This worksheet will help you think through how to effectively audit your compliance initiatives and help you get an in-depth view of the quality of your compliance program throughout your company’s processes, systems, and practices.
I’d like to thank everyone who scheduled some time with us during the AFSA Annual Meeting. I had a great time connecting with you all and discussing the future of our industry—however nebulous that future may appear.
Whether we spoke at the meeting or missed our chance, Compli is here to help your organization. As I wrote in my last post, we recently launched a cybersecurity solutions set that helps lenders address some of their most significant concerns about consumer data protection. Our platform is also continually updated to reflect the latest regulatory changes on the state and federal levels, so lenders can rest assured their organizations are covered, no matter what happens next.
If you’d like to discuss any of these topics further and learn more about our compliance solutions, feel free to send me an email.