The Consumer Financial Protection Bureau is opening an Office of Innovation and Competition, replacing its previous Office of Innovation as well as Project Catalyst.
The move is part of a broader agency effort to analyze obstacles to open markets, better understand how big players can squeeze out smaller players, host incubation events, and make it easier for people to switch financial providers. The office will focus on creating market conditions which increase consumer choice, foster better products, and prevent “large incumbents” from “exploiting their network effects or market power” to stifle competition, the agency said.
Founded in 2018, the Office of Innovation mostly worked to process applications for No Action Letters and regulatory “sandboxes” which allowed individual companies to experiment with a specific product offering under specific conditions. The eight-year-old Project Catalyst identified structural problems blocking new competitors, used data to strengthen competition and worked to challenge market structures harming consumers. An assessment of the two programs found them “ineffective,” the bureau said, and some participating companies misrepresented the extent of the benefits granted to them by the CFPB.
“Competition is one of the best forms of motivation. It can help companies innovate and make their products better, and their customers happier,” said CFPB Director Rohit Chopra. “We will be looking at ways to clear obstacles and pave the path to help people have more options and more easily make choices that are best for their needs.”
The move echoes an increased emphasis President Joseph Biden has placed on market competition, issuing an executive order promoting it last summer. “Excessive market concentration threatens basic economic liberties, democratic accountability, and the welfare of workers, farmers, small businesses, startups, and consumers,” Biden said in the order.
The CFPB has announced a number of moves designed to promote competition, including a compliance bulletin on how companies can interact with consumer reviews.