Earlier this week, the Director of the Consumer Financial Protection Bureau (“CFPB”), Richard Cordray, spoke at a field hearing were he discussed the CFPB’s new authority to supervise consumer reporting agencies. Starting this September, the CFPB will have the authority to supervise 94% of the credit reporting industry. Until now, consumer reporting agencies (commonly referred to as “credit reporting agencies” or “credit bureaus”), the largest of which are Equifax (including credit files owned by CSC Credit Services), Experian, and Trans Union, have never been subject to like supervision. From conducting on-site examinations to seeking better comprehension of policies and procedures, the CFPB’s supervisory authority will seek to ensure that the consumer financial laws are being followed.
The creation of the consumer bureau, the CFPB, was done so in response to the recent financial crisis experienced by the United States.
In June 2009, President Obama proposed to address failures of consumer protection by establishing a new financial agency to focus directly on consumers, rather than on bank safety and soundness or on monetary policy. This new agency would heighten government accountability by consolidating in one place responsibilities that had been scattered across government. The agency would also have responsibility for supervision and enforcement with respect to the laws over providers of consumer financial products and services that escaped regular Federal oversight. This agency would protect families from unfair, deceptive, and abusive financial practices. The President urged Congress to give the consumer agency the same accountability and independence that the other banking agencies have and sufficient funding so it could ensure that powerful financial companies would comply with consumer laws.
In July 2010, Congress passed and President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Act created the Consumer Financial Protection Bureau (“CFPB”). The CFPB consolidates most Federal consumer financial protection authority in one place. The consumer bureau is focused on one goal: watching out for American consumers in the market for consumer financial products and services.” (Creating the Consumer Bureau, www.consumerfinance.gov.)
The examinations of the consumer reporting agencies will begin after the CFPB publishes its procedures which will be tailored to fit its new supervisory role. The CFPB has issued similar procedures for other companies that it is currently supervising. A factsheet about the CFPB’s supervision of credit reporting is available at: http://files.consumerfinance.gov/f/201207_cfpb_factsheet_credit-reporting-market.pdf.