The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) have signed a deal to coordinate consumer protection efforts and help avoid duplicating federal law enforcement and regulatory efforts.
The Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB, requires the two agencies to work together on their enforcement activities and promote "consistent regulatory treatment of consumer financial products and services."
“Entering this agreement with the FTC is important to making sure markets for consumer financial products are getting efficient and effective federal government oversight,” says Richard Cordray, director of the CFPB. “We are both motivated by the same thing: To do right by consumers.”
The CFPB was created as part of the 2010 overhaul of financial rules. In July, it became the lead agency in administering several laws aimed at protecting consumers from unfair or deceptive financial products and services. It can write rules, study their effects and issue reports. Those powers previously rested with the FTC.
Under the new setup, both agencies will continue to enforce the consumer laws. If a company misled consumers about the cost of a loan or tacked on illegal fees, for example, either the FTC or the CFPB could bring civil charges against it.
That overlap worries opponents of the new agency. They say it will increase costs and create confusion because businesses wouldn’t know which regulator is in control. Monday’s agreement aims to address those concerns.
“We have another cop on the beat, and this agreement ensures that businesses will not be doubled-teamed by two agencies,” FTC Chairman Jon Leibowitz said in a statement.
The FTC was criticized widely for failing to curb abuses by mortgage companies and others before the 2008 financial crisis. The commission brought a small handful of civil actions against mortgage servicers that foreclosed illegally on thousands of homeowners.
In the Memorandum of Understanding, the agencies have supplemented the requirements of the Dodd-Frank Act. Among the points the two agencies have agreed to:
• meet regularly to coordinate upcoming law enforcement, rulemaking, and other activities;
• inform the other agency, absent exigent circumstances, prior to initiating an investigation or bringing an enforcement action. This notice will prevent duplicative or conflicting enforcement efforts and undue burdens on industry;
• consult on rulemaking and guidance initiatives to promote consistency and reflect the experience and expertise of both agencies;
• cooperate on consumer education efforts to promote consistency of messages and maximum use of resources; and share consumer complaints.