Federal Financial Regulatory Reform –
What it means to consumers
In July 2010 President Obama
signed into law the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010. Included in this landmark legislation is the
creation of the Bureau of Consumer Financial Protection (BCFP).
The bureau’s jurisdiction will include the vast majority of the
financial services industry, including those products and service
offered by licensed financial service centers (FSCs). Millions of
Americans routinely use these stores to conduct basic financial
transactions, including cashing checks, paying bills, taking out small
loans, wiring money overseas and reloading prepaid debit cards among
other products and services.
On September 17, 2010 President Obama appointed Elizabeth
Warren to the position of Special Advisor to the President with
responsibility for setting up the BCFP. Warren first proposed the idea
of a consumer financial protection agency. Her responsibility includes
overseeing all aspects of setting up the new agency, including hiring
staff and determining its priorities. At the time he made the
appointment President Obama indicated that Warren would not be the
Bureau’s first director but would assist in identifying that
individual. No candidate for this position has been named at the present
Commonly asked questions:
Q. When will the new Bureau be officially in charge?
A. The target date for BCFP to be up and running is July
2011. By that time, BCFP should have adequate staff and procedures in
place to commence operations.
Q. What will the
new Bureau be in charge of?
A. BCFP will have jurisdiction over virtually every
finance-related product used by consumers, including credit cards, home
mortgages, loans, checking accounts and all the services customers
typically receive at financial service centers, including bill payment,
check cashing and wire transfers. The bureau will have the power to
write new regulations and will have enforcement powers as well.
Q. Will I still be able to cash my check/pay
bills/wire money/get a payday loan/get a money order at the store I go
to now? Will my costs for these transactions go up?
A. Right now, it is too early to know what impact BCFP
will have on customer access to financial services. The bureau is still
several months away from being up and running. It will need to
establish priorities as to those financial products and services to
first target for stronger regulatory oversight. We expect that new rules
impacting our industry, and customer access to the products and services
received at financial service centers, to be at least one year away from
being implemented. Eventually, BCFP could significantly reduce, if not
eliminate altogether, Americans’ access to small dollar credit and
other financial products, and eliminate their ability to choose the
financial products and services that they need and want at locations
that are most convenient to them.
Q. These stores are
not banks so why are they included within the jurisdiction of BCFP?
A. Good question. While Congress was deliberating creation
of BCFP, the industry repeatedly made the argument that it should not be
subject to the jurisdiction of this new agency. Unfortunately, Congress
adopted a “let’s include everyone” mindset when
defining those industries subject to BCFP
Q. Is anyone doing anything to protect
my access to these products and services?
A. BCFP is due to be up and running by July 2011.
In the coming months FiSCA will be actively engaged throughout the
process creating this new government bureaucracy to ensure that the
interests of our industry, and the millions of Americans who use our
members’ services every day, are represented. Given that the BCFP
will soon become a fact of business life, it is imperative that the new
regulations create a level playing field in the marketplace so that the
FSC industry can fairly compete with banks and other traditional
financial institutions and that consumers continue to have access to the
financial services they need where and when is most convenient for them.
Regulators must fully understand the crucial role our industry plays in
meeting the financial needs of millions of Americans every day. This has
become FiSCA’s Number One mission.