UK Consumer Credit Agenda Strikingly Similar to CFPB’s
The Financial Conduct Authority’s (FCA) 2014/2015 Business Plan’s consumer credit agenda looks strikingly similar to the Consumer Financial Protection Bureau’s (CFPB) agendas from years past. For American financial services firms, the FCA’s laundry list of rulemakings and supervisory priorities may feel like déjà vu, but for many UK firms it represents a new regulatory frontier.
As the new primary consumer credit regulator, the FCA’s mission is to ensure the fair treatment of consumers through supervision and enforcement, while simultaneously maintaining market integrity. US firms have already dealt with a similarly empowered regulator. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) tasked the CFPB with regulating all consumer financial products. Given their similarities in regulatory scope and the commonly shared experiences of the largest financial markets in the wake of the 2008 financial crisis, it’s no surprise that nearly every agenda item outlined by the FCA has been recently addressed by the CFPB.
This similarity in regulatory focus represents an opportunity for UK firms to prepare for the inevitable. Where many US firms were caught off-guard by new areas of regulatory authority, UK firms can know what to expect.
Reading the Tea Leaves
So what exactly should UK firms look forward to? An in-depth look into the CFPB’s track record and the FCA’s Business Plan reveals that the two agencies share the following priorities: risky mortgage products; mortgage servicing; debt management; payday lending; consumer disclosures; and consumer outreach. By examining the experience of US firms with each priority, UK firms can tool themselves for the challenges ahead. Both UK firms and the FCA should pay close attention to the problems that the US faced and improve upon the experience of their counterparts.
Read the article on Law360 here.