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The US Consumer Financial Protection Bureau (CFPB) has withdrawn dozens of guidance documents affecting a wide range of financial services, including remittances, payments, retail banking, credit cards and consumer credit.
“Americans deserve an open and fair regulatory process that imposes new obligations on the public only when consistent with applicable law and after an agency follows appropriate procedures,” the CFPB explained when announcing the changes.
This move is unsurprising considering the shift in mindset from the CFPB since the beginning of the second Trump administration, but still feels monumental considering the number of rules that have been withdrawn.
The withdrawal covers interpretive rules, advisory opinions, policy statements, bulletins and circulars issued since the CFPB’s inception in 2011.
These documents have served as informal interpretations or explanations of consumer financial laws, and have been used by banks, credit unions, fintech firms, and payment service providers (PSPs) to shape compliance programmes and product design.
“The CFPB has issued non-binding policy guidance in myriad forms over its history. This guidance has taken the form of guidance documents, interpretive rules, advisory opinions and policy statements,” the regulator said.
“In many instances, this guidance has adopted interpretations that are inconsistent with the statutory text and impose compliance burdens on regulated parties outside of the strictures of notice-and-comment rulemaking.”
What is being axed?
The documents that are being withdrawn are varied, and touch upon issues such as:
- Remittances: Pandemic-era remittance guidance and circulars related to remittance disclosures.
- Fraud and data practices: Circulars involving deceptive FDIC insurance representations, data protection standards, and algorithmic decisions.
- Retail banking: Bulletins addressing overdraft opt-ins, reopened deposit accounts and unfair returned item fees.
- Credit cards and consumer credit: Guidance on promotional APR marketing, early wage access, private education loans and other forms of credit under Regulation Z.
- Credit reporting and collections: Advisory opinions on file disclosures, background screening, debt collection practices and time-barred debt.
Next steps
The Bureau indicated that it is reassessing all previously issued guidance to determine which materials, if any, should be retained or reissued.
Although the withdrawn guidance is no longer enforceable or relied upon by the CFPB during this period of review, the regulator has not ruled out reissuing selected documents in the future, particularly where doing so could reduce compliance costs or clarify statutory obligations.
“To the extent guidance materials or portions thereof go beyond the relevant statute or regulation, they are unlawful, undermining any reliance interest in retaining that guidance. Where guidance is not per se unlawful, the Bureau nonetheless determines that guidance should be withdrawn and that it should be reissued only if the guidance is necessary and only if it reduces compliance burdens,” the CFPB said.
“The Bureau determines that the benefits of this policy outweigh the cost to any purported reliance interests.”
What needs to be done now?
Firms in the financial services space will be familiar with regulatory overwhelm, and perhaps the CFPB’s oversight is responsible for this.
However, what the CFPB has done here in its new streamlined approach is likely to lead to deregulatory overwhelm.
Although it is technically a deregulatory push — and really, firms should be happy about such a thing — it could also be argued that the scale of the withdrawn regulation will trigger more legal guesswork and potentially more risk.
Firms need to identify which of the rescinded documents they previously relied on for compliance, operational practices, or legal interpretation.
This includes reviewing internal policies, training materials and product disclosures that may have been shaped by now-withdrawn guidance.
Meanwhile, without those interpretive documents, firms may find that they need to rely more heavily on the underlying statutes and regulations themselves.
Legal and compliance teams should revisit the relevant provisions of the Truth in Lending Act (Reg Z), the Electronic Fund Transfer Act (Reg E), the Fair Credit Reporting Act and others to ensure continued adherence.
In these new circumstances, it would be wise for firms to come together via trade associations and other methods to work out which industry practices to take forward, and how best to do so.
