A systematic process by the federal consumer financial protection agency for prioritizing risks to consumers could use principles such as assessment of the extent of potential harm to consumers in financial markets, the congressional watchdog recommended Friday while also urging the agency to make up its mind about using a process developed in 2015, but not yet adopted.
In a report, the Government Accountability Office (GAO) noted that the Consumer Financial Protection Bureau (CFPB – known briefly until this week as the BCFP) has routinely monitored consumer financial markets to identify potential risks to consumers related to financial products and services. The bureau, GAO noted, monitors consumer complaints, analyzes market data, and gathers market intelligence from external groups.
“CFPB has used risk-monitoring findings to inform its rulemakings, supervision, and other functions,” GAO wrote in its report, Consumer Financial Protection Bureau Needs a Systematic Process to Prioritize Consumer Risks.
“In 2015, CFPB initiated a bureau-wide process for using market data and other information to set policy priorities related to addressing risks to consumers,” the congressional watchdog wrote. “However, CFPB has not yet decided whether it will continue to use this process to set priorities.”
GAO asserted that the bureau currently lacks a systematic, bureau-wide process for prioritizing financial risks to consumers and considering how it will use its tools – such as rulemaking, supervision, and consumer education – to address them.
The GAO recommended that CFPB Director Kathy Kraninger should implement a systematic process for prioritizing risks to consumers and considering how to use the bureau’s available policy tools – such as rulemaking, supervision, enforcement, and consumer education – to address these risks. “Such a process could incorporate principles from the prior One Bureau process, such as an assessment of the extent of potential harm to consumers in financial markets, to prioritize the most significant risks.”
(The “One Bureau” process was initiated by the agency in 2015. However, GAO noted, CFPB officials told GAO the most recent round of this process was completed in 2017 and that bureau leadership has not yet decided whether to continue using the process.)
The study was authorized, GAO said, by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank), which includes a provision for GAO to annually study financial services regulations, including CFPB’s related activities.