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WASHINGTON – A federal regulator is considering explaining what it sees as "abusive" practices on the part of companies selling financial services, to give a more accurate idea of the behavior that would cause trouble to businesses under relatively new government enforcement powers.
Mick Mulvaney, Acting Director of the Office of Consumer Financial Protection, said Monday that the office was working on a regulation defining how it considers unfair, misleading or abusive acts or practices known as Udaap. Most of the CFPB's enforcement actions relate to such claims and the 2010 Dodd-Frank Financial Act, which created the CFPB and conferred broad enforcement powers on it.
Companies have long complained about the overly broad and nuanced approach adopted by the CFPB for Udaap, making it less predictable and triggering repressive action.
Speaking at a conference of mortgage bankers in Washington, Mr Mulvaney said the actions qualifying as "unjust" and "misleading" are well established. "But to my knowledge, I do not think the word" abusive "is nearly as well established in the law."
He added that the regulation would remove any uncertainty as to the meaning of the term. "We need examples of abusive but not unjust or deceptive things."
Mulvaney said the CFPB would continue to open investigations and prosecute for breaking the rules.
Robert Broeksmit, Managing Director of the Mortgage Bankers Association, questioned Mulvaney, saying "our members will agree that the law [that defines enforcement] it's not written clearly. "
Mr. Mulvaney recently touched on the Bureau's application of the law to put in place a more respectful industry approach to controlling financial corporations. Since taking office in November, the member appointed by Trump has reduced the number of enforcement measures, committed to ending "enforcement by regulation" and sought to remain under the authority of office.
Consumer advocates have stated that making the CFPB's enforcement policy explicit could limit the scope of its powers, which would reduce the number of enforcement measures imposed on companies.
The CFPB under Mulvaney continued to file claims related to Udaap, including an agreement with TCF National Bank in July, in which the lender was charged with "misleading and abusive" overdraft charges.
The CFPB is expected to publish its first detailed roadmap for rule-making under the Trump administration later this year, officials at the CFPB said.
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