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A group of 22 state Attorneys General are calling on the Consumer Financial Protection Bureau not to adopt proposals related to expanding the agency’s use of No-Action letters and use of a fintech sandbox to foster innovation in financial services.
The CFPB announced the new proposal back in December. [Editor’s Note: Check out the webinar AccountsRecovery.net did on the topic.] No-Action letters were meant to spur innovation in the financial services industry by offering guarantees that the CFPB would not take legal action against a regulated company for a product or service that provided a benefit to consumers. A No-Action letter signifies that the CFPB has no present intent to recommend initiation of supervisory or enforcement action against a particular product or service from a particular entity.
The proposed policies “would permit the CFPB to exempt – in some cases indefinitely – companies and even entire industries from certain consumer protection laws and regulations through a process designed to value speed over careful decision-making,” the AGs wrote in their comment letter. “On behalf of the millions of American consumers we collectively represent, we reject the notion – embodied in the proposed policies – that innovation can only be fostered by permitting companies to evade the law, and urge you to reconsider and rescind the proposed policies.”
By making No-Action letters binding indefinitely, the AGs questioned whether the CFPB had the power to do so without going through a formal rulemaking process, the CFPB would be handing companies a “permanent get-out-of-jail-free card,” they wrote.
Among the state AGs contributing to letter were: New York, California, Illinois, Massachusetts, Michigan, Pennsylvania, Virginia, Washington, and Wisconsin.
