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Signs of the Covid-19 pandemic fading away include things like open restaurants, fully packed stadiums, and a return to travel. But for the financial-services industry, the real end of the pandemic may be signaled when regulators knock at the door.
During the pandemic, the Consumer Financial Protection Bureau extended certain flexibilities to the companies it supervises. Those came to an end on April 1, and the Bureau released a new rule-making agenda on June 11.
The Bureau had granted flexibility on March 26, 2020, for quarterly reporting under the Home Mortgage Disclosure Act, information collection for credit card and prepaid account issuers, billing error resolution timeframes, electronic credit card disclosures, and several other matters. In a March 29, 2021, Federal Register filing, the agency said it was trying to accommodate “staffing and related resource challenges” caused by the pandemic.
But now “the Bureau believes that companies should have had sufficient time to adapt to the pandemic and should now be able adequately to comply with the law and respond to enforcement actions or supervisory activities without the flexibility afforded under the statement.”
Still, it is not as though a switch was flipped and we can all go back to the way things were. While it is true health orders are ending and offices can open again, these changes bring their own challenges. As companies and employees figure out their new post-pandemic normal, challenges may still arise as they manage differing vaccination statuses of employees, the return to offices that have been closed for nearly a year, and workers who might want to remain at home. We can only hope the Bureau extends flexibility on a case-by-case basis and not insist that it is 2019 again.
Looking ahead, one topic on the Bureau’s near-term agenda is consumers’ access to their own financial data and how that data is shared among organizations. An advance notice of proposed rulemaking has been completed, and companies should be on the lookout for a proposed rule.
In its long-term plans, the Bureau says one of the things it intends to look at is artificial intelligence and machine learning and the data used by these tools. “The Bureau recognizes the importance of continuing to monitor the use of AI and is evaluating whether rulemaking, a policy statement, or other Bureau action may become appropriate,” it said in its long-term agenda.
These and other items on the Bureau’s agenda all revolve around data. Companies should review their own policies on data collection, retention, and use, and be prepared for new rules.
Meanwhile, the Bureau is in a legal fight with PayPal over the prepaid rule. PayPal won the first round with a decision that vacated the parts of the rule requiring the short-form disclosure and the 30-day credit-linking restriction. The Bureau has filed an appeal. The Bureau must file its initial brief by Aug. 2, and PayPal must file its initial response by Sept. 29. Additional documents will be due in November, with final briefs due on Nov. 24.
Because the appeals are ongoing, the Innovative Payments Association recommends companies continue providing the short form and delay offering credit until a final ruling. If the Bureau prevails, those restrictions will come back into place, and companies could see customers whipsawed between having access to credit and not.
If the Bureau loses, it may respond by adding a new digital-wallet or prepaid rule to its list. This could lead to a new government-relations agenda for the entire industry.
As the pandemic begins to subside, a new regulatory agenda may force as many changes as the crisis did.
—Ben Jackson, bjackson@ipa.org
