In this issue. The Consumer Financial Protection Bureau (CFPB) issued an advisory opinion on complying with the Fair Debt Collection Practices Act (FDCPA) and Regulation F in the collection of medical debt; the CFPB reported on challenges facing servicemembers and veterans with student loans; the CFPB released a chart for determining whether an entity must register an order under the CFPB's Nonbank Registration Regulation; and federal and state bank regulators issued an interagency statement on supervisory practices regarding financial institutions affected by Hurricane Helene. These and other developments are discussed in more detail below.
Regulatory Developments
CFPB Issues Advisory Opinion on FDCPA Compliance for
Medical Debt
On October 1, the CFPB issued an
advisory opinion reminding debt collectors of their
obligation to comply with the FDCPA and Regulation F's
prohibition of false, deceptive, or misleading representations or
practices when collecting on medical debt. The CFPB noted that
medical providers are increasingly outsourcing collection to
third-party collectors who do not have access to the
providers' payment and billing data, increasing the
likelihood of inaccuracies in the collection process. The CFPB
advises debt collectors that they are strictly liable under the
FDCPA and Regulation F for misrepresenting a consumer's legal
obligations or collecting on: (1) payments already made, including
those by insurance or government programs; (2) amounts not owed or
above what can be charged under state or federal laws; (3) services
the consumer did not receive; or (4) bills that the debt collector
cannot substantiate with corroborating information, such as payment
records.
CFPB Reports on Challenges Facing Servicemembers and
Veterans with Student Loans
On September 24, the CFPB released its
annual report on the top financial concerns facing
servicemembers, veterans, and military families in 2023. The CFPB
saw an increase in complaints by servicemembers across all major
products (credit reporting, debt collection, credit cards, etc.),
up 98% from 2021 and 27% from 2022. In particular, servicemembers
reported problems with student loan servicers, including challenges
contacting or getting help from student loan servicers and
receiving incorrect calculations of payments due under
income-driven repayment plans. Servicemembers also reported
colleges and universities withholding official academic records due
to unpaid loans. The CFPB also noted an increase in complaints from
older veterans who were the target of fraud and scams.
CFPB Releases Chart for Determining Whether to Register
an Order Under the CFPB's Nonbank Registration
Regulation
On October 3, the CFPB released a
chart that summarizes how an entity may determine if it is
required to register an order under the CFPB's
Nonbank Registration Regulation. Additional resources to assist
with an entity's compliance with the regulation are
available
here. The registration submission period for larger participant
CFPB-supervised covered nonbanks begins on October 16, 2024 and
extends through January 14, 2025.
Federal and State Bank Regulators Issue Interagency
Statement on Supervisory Practices Regarding Financial Institutions
Affected by Hurricane Helene
On October 2, in the wake of Hurricane Helene, the Federal Deposit
Insurance Corporation, the Board of Governors of the Federal
Reserve System, the National Credit Union Administration, the
Office of the Comptroller of the Currency, and state financial
regulators (collectively, Agencies) issued a
statement (Statement) outlining supervisory practices that
the Agencies intend to observe with respect to institutions
operating in affected areas, including specifically with respect to
lending, temporary facilities, publishing requirements, regulatory
reporting requirements, the Community Reinvestment Act, and
investments. The Statement includes links to resources offered by
each Agency to financial institutions operating in areas affected
by a major disaster.
Check Out Goodwin's Latest Industry Insights
New Client Alert: SEC Rulemaking Returns After Quiet
Stretch: Assessing the SEC “Reg. Flex” Agenda for BDs
and Exchanges
In July 2024, the federal Office of Information and
Regulatory Affairs, or “OIRA,” published the
SEC's
Spring 2024 “Reg. Flex” agenda. Under Chair
Gensler, the SEC has already adopted 40+ final rulemakings, has
formally proposed an additional dozen-plus rulemakings that it
expects to adopt soon, and plans on proposing more than a dozen
fresh proposals on top of that. The 70+ total rulemakings targeted
by Chair Gensler compares to a total of 43 adopted rulemakings
under prior Chair Clayton and 22 adopted rulemakings under former
Chair White. The anticipated dates in the agenda are merely
projections, and it is possible that some of these rulemakings will
not proceed. However, with the election approaching, the
Chair's sense of urgency must be high, which is only one of
several reasons why the agency's rulemaking schedule has
returned after a significant lull the past several months. To read
the full alert, click
here.
New Client Alert: A New Safeguarding Regime: Five Points
for Payments and E-money Firms
For any UK fintech business involved with payments of
electronic money (e-money) and any (experienced) investor in these
businesses, safeguarding client funds is a key regulatory issue.
The Financial Conduct Authority (FCA) consultation on changes to
the safeguarding rules for FCA-authorised payments and e-money
firms, “
CP24/20: Changes to the safeguarding regime for payments and
e-money firms” (Consultation), is therefore noteworthy.
To read the full alert, click
here.
New Fintech Flash: Double Clicking on Innovation in
Consumer Finance: Responsible Use of AI
Artificial intelligence (AI) is becoming ubiquitous across
sectors, and the financial services industry is no exception. With
the rise of AI, there is also an increase in scrutiny by regulators
over its use. This Fintech Flash addresses, and provides
recommendations regarding, the responsible use of AI in credit
underwriting, marketing, and “chatbots.” To read the
full flash, click
here.
Upcoming Event: Goodwin & Wells Fargo Host a Tea
Party During Boston Fintech Week
Please join Goodwin and Wells Fargo as they “spill
the tea” in a discussion about enterprise partnerships and
partnership readiness on October 16th from 2:30 - 4:30 PM during
Boston Fintech Week. For more information and to RSVP,
click
here.
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