September 11, 2019

CFPB issues 3 innovation policies

CFPB BuildingThe CFPB Tuesday issued three new policies – the No-Action Letter (NAL) Policy, Trial Disclosure Program (TDP) Policy, and Compliance Assistance Sandbox (CAS) Policy – intended to promote innovation and facilitate compliance at financial institutions. All three policies were proposed by the bureau last year; the final policies are responsive to NAFCU's recommendation that participation in innovation programs should be made easier.

The new policies include more detailed information about the assessment and issuance process, while also clarifying that a trade association application may be used to obtain a waiver template for use by association members. NAFCU had sought such clarification from the bureau in its original comments.

"Innovation drives competition, which can lower prices and offer consumers more and better products and services," said CFPB Director Kathy Kraninger in a release. "New products and services can expand financial options, especially to unbanked and underbanked households, giving more consumers access to the benefits of the financial system. The three policies we are announcing today are common-sense policies that will foster innovation that ultimately benefits consumers."

The bureau also announced that it has partnered with state regulators to create the American Consumer Financial Innovation Network in efforts to increase coordination and encourage financial innovation, as well as plans to give a no-action letter to more than 1,600 housing counseling agencies at the request of the Department of Housing and Urban Development.

Earlier this year, NAFCU's Andrew Morris shared the association's support of the initiatives put forth in the policies and creation of the sandbox.

"NAFCU supports the Bureau's decision to introduce a formal program to grant safe harbor approvals and exemptions under specific statutory or regulatory provisions," wrote Morris. However, Morris said it should not be the only mechanism for advancing reform efforts and encouraged the bureau "to broadly utilize its approval and exemption authorities through general rulemakings … as it identifies outdated, ineffective or unduly burdensome regulations, without waiting for Sandbox participants to prove the case for regulatory relief."

NAFCU remains committed to ensuring a level playing field for credit unions and will continue to monitor the financial services landscape for potential changes that could impact the industry. The association's new fintech whitepaper seeks to empower credit unions with the tools to better serve their communities, while ensuring proper congressional and regulatory oversight of fintech. Download the whitepaper.