On May 24, 2022, the Consumer Financial Protection Bureau (CFPB) announced that it is replacing the Office of Innovation with the newly-established Office of Competition and Innovation. The CFPB intends to "help spur innovation in financial services by promoting competition and identifying stumbling blocks for new market entrants."
The new office replaces the Office of Innovation, whose primary focus was to process applications for No-Action Letters and Sandboxes which applied to an individual company's specific product offering. The CFPB found these initiatives were "ineffective." Further, the CFPB said that participating companies made public statements that were not always consistent with the program's benefits.
The new Office of Competition and Innovation is tasked with increasing competition to benefit consumers. It will explore ways to reduce barriers to switching accounts and providers; research structural problems blocking innovation; and identify ways to address obstacles facing innovators, including through rulemaking that will give consumers—and the innovators—access to their own data "stored by the big banks." Furthermore, they will host events to explore barriers to entry and other obstacles that innovators may encounter.
Although the CFPB did not explicitly state that No Action Letters will no longer be issued, taken as a whole, we question whether that may be the result based on the CFPB's focus shifting away from individual entity requests. Instead, the CFPB "encourages companies, start-ups, as well as members of the public to file rulemaking petitions and request clarity on particular rules" to help "level the playing field and foster competition."
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