CFPB quietly rolls out new enforcement routes

In late February, the Consumer Finance Protection Bureau (CFPB) released updated “Rules of Practice for Adjudication Proceedings.” The amended process lets the CFPB avoid backlogged federal courts in favor of administrative courts.

Why should we care?
These new pathways will let the Bureau respond more expediently to a dynamic financial landscape. Where the CFPB once exclusively depended upon federal judges to create resilient legal precedents, it will now be able to pivot cases to administrative systems. CFPB Director Rohit Chopra clearly sees these administrative changes as a way to buttress against sudden administrative shifts—in other words, if the Democrats fail to secure another term in the White House. Chopra told congress that he has “huge aspirations to create durable jurisprudence” in how “abusive” acts are defined in the context of the Dodd-Frank Act. These updated rules also allow the CFPB Director to bifurcate proceedings, splitting liability and damages, for instance, so that the Bureau can quickly establish whether a financial institution is violating the law and then proceed more cautiously to ascertain damages in federal court. This way, the CFPB can rush to prevent other corporations from engaging in similar practices, excising intricacies from the spirit of the law. The CFPB is tasked with protecting consumers against abuses related to credit cards, mortgages, and other financial products. In the CFPB’s crosshairs, fintechs might fear this new nip-it-in-the-bud type of enforcement, but reduced latency may benefit them in the long run, preventing overdue compliance pivots in light of updated federal regulation.