"If You Don't Tell Santa What You Want For Christmas, How Will He Know?"
Contributed by Blair Rugh, Trinovus
The Dodd-Frank Act transferred to the Consumer Financial Protection Bureau rule making authority under fourteen separate laws. As part of the transfer, Dodd-Frank authorized the Bureau to "reduce unwarranted regulatory burden" by regularly identifying and addressing "outdated, unnecessary, or unduly burdensome regulations." The Bureau is in the process of republishing the regulations over which it has been granted authority and in doing so has requested comment on changes that could be made to the existing regulations that would reduce the regulatory burden but not cause undue harm to the consumer.
No one is going to confuse the Consumer Financial Protection Bureau with Santa Claus, but let's give it the benefit of the doubt. If enough bankers respond, maybe some good things will come of it. Anyone that wants to respond has 90 days to do so. (Comments must be submitted by March 5, 2012. Commenters will have 30 additional days, until April 3, 2012, to respond to other comments.)
Financial institutions are in a better position than anyone to know which portions of the regulations are the most costly to comply with and which appear to have the least value to consumers. If you don't take a few minutes to think about it and respond, do not complain when the changes that you would like are not made.
The principal laws and regulations that the Consumer Financial Protection Bureau now has rule making authority over are:
• The Consumer Leasing Act, Regulation M
• The Electronic Fund Transfer Act, Regulation E
• The Equal Credit Opportunity Act, Regulation B
• The Fair Credit Reporting Act, Regulation V
• The Fair Debt Collection Practices Act
• The Gramm-Leach-Bliley Act, Regulation P
• The Home Mortgage Disclosure Act, Regulation C
• The Real Estate Settlement Procedures Act, HUDʼs Regulation X
• The SAFE Mortgage Licensing Act,
• The Truth in Lending Act, Regulation Z, and
• The Truth in Savings Act, Regulation DD
In the announcement, the Bureau says that it will spend most of its time over the next year implementing the changes to Regulation Z and the other consumer lending regulations mandated by Dodd-Frank to be in place by January 1, 2013. As they are doing that, they want to look at the streamlining of the regulatory practice.
The Bureau even came up with a few suggestions on its own. For one, how about doing away with the requirement for an annual privacy notice under Regulation P. That would have several laudable consequences. In addition to reducing the regulatory cost to institutions, it would save a few trees, reduce the burden on consumers who have to throw the notices away and reduce the burden on the landfill into which it is ultimately deposited. Another Bureau suggestion is what is the purpose of a physical sign on an ATM machine stating that a fee will be imposed for its use when there is a screen that says the same thing and tells the amount of the fee?
One of the suggestions I would make is to insert in the advertising rules of Regulation Z a dispensation of triggered terms for radio, TV and billboard advertising and for signs in the branch similar to those in Regulation DD. A second suggestion is to do away with the requirement to provide a full account disclosure under Regulation DD prior to the automatic renewal for automatically renewable time deposits with a term of greater than one year. The short form notice for shorter term time deposits tells the consumer all that he or she really needs to know. How about this? Under Regulation P, an institution can share consumer information with a non-affiliated financial institution for the joint marketing of a financial product if the institution notifies the customer that it will do so in its privacy notice. On the other hand, if the other financial institution is an affiliate, the customer must be given the right to opt out. What is the purpose in making sharing with a non-affiliated financial institution easier than with an affiliated one over which the financial institution would have a greater degree of control?
You will find the notice on the CFPBʼs website. I strongly suggest that you go there, read it and respond. If we are honest with ourselves, many of the regulations that we have to live with today are the result of a few financial institutions taking advantage of their customers. However, when laws are written to correct an abuse, normally, there is a lot of overkill. Hopefully, this is an opportunity to get rid of some of or at least bring it to the surface.