When the Consumer Financial Protection Bureau (CFPB) began operation just over four years ago, consumers were made — for the first time — a priority for federal financial regulators. As chief financial regulator in Vermont from 1992 to 2003, I was often prevented by federal law from protecting the citizens of my state. For instance, I and other state regulators worried about predatory lending well before the financial crisis, but we could take no action against nationally chartered banks, their subsidiaries and others because federal law gave these lenders immunity from state consumer protections.
Consumer complaints were also a very low priority for federal regulators. When Vermont citizens complained about federally regulated banks and lenders, we had to tell them to call the federal agencies. They would often come back to the state because they could not get through on the telephone — no wonder, the 800 number was shared by four federal agencies including the IRS.
In its first four years, the CFPB has turned this situation around — it is now the leader in creating a fair financial marketplace and giving consumers a voice. It has created a state-of-the art complaint system where individuals can file their complaints and financial companies have to respond to them. To date the CFPB has received over 700,000 consumer complaints covering mortgages, credit cards, debt collectors, auto loans, student loans, bank accounts, credit reports, payday loans and more. Consumers, their advocates and the press can use the CFPB’s website to search and compare companies’ complaint records and monitor the substance of those complaints. The CEOs and top management of reputable companies will now see how individuals experience their customer service function — formerly seen as a necessary evil and cost center rather than a potential business advantage.
The CFPB’s consumer complaint database is only one initiative focused on the consumer. The agency is using all the powers granted by the Dodd-Frank Financial Reform Act to build a financial system that treats consumers fairly. It has issued new rules, examined companies and taken enforcement actions — all aimed at redressing consumers’ grievances and changing companies’ behaviors. Through enforcement actions alone, the CFPB has provided more than $11 billion in relief for over 25 million consumers.
Through rules and enforcement cases, the CFPB is requiring lenders to make loans based on the consumer’s ability to repay and is making loan servicers respond promptly and accurately to borrowers inquiring about the status of their mortgages and loan modifications — losing a borrower’s paperwork is no longer an excuse. The CFPB has also begun to oversee companies such as credit reporting agencies and debt collectors that previously had not been directly regulated at the federal level. Last month it found that two large debt collectors had failed to verify whether the debts were owed, harassed alleged debtors and filed many lawsuits based on robo-signed filings that contained misleading information and false statements. The companies agreed to provide $61 million in refunds and stop collection of $128 million worth of debts.
These examples are only few of the changes the CFPB is making as it works to protect people and create a financial marketplace that is fair to consumers and a good place to do business for responsible financial companies.
Elizabeth Costle is the senior adviser for consumer protection in AARP’s Public Policy Institute. She is a former member of the CFPB’s first Consumer Advisory Board.