The Consumer Financial Protection Bureau has launched the American Consumer Financial Innovation Network in partnership with multiple state regulators. ACFIN is aimed at enhancing coordination among federal and state regulators to facilitate financial innovation.
ACFIN enhances shared objectives such as competition, consumer access, and financial inclusion. Additionally, ACFIN promotes regulatory certainty for innovators, benefiting the U.S. economy and consumers alike. The network also seeks to keep pace with market innovations and help ensure they are free from fraud, discrimination, and deceptive practices.
As a result of this partnership, ACFIN members will share information to facilitate coordination among the members, and coordinate on innovation-related policies and programs.
“Federal and state coordination promotes consistency in the regulation of consumer financial products and services while facilitating consumer-beneficial innovation,” said CFPB Director Kathy Kraninger. “ACFIN will provide a platform for Federal and State regulators to coordinate with each other as they develop new rules of the road and apply existing ones.”
The CFPB invited all state regulators to join ACFIN, and the initial members of ACFIN are the Attorneys General of Alabama, Arizona, Georgia, Indiana, South Carolina, Tennessee, and Utah.
The bureau also issued three new policies to promote innovation and facilitate compliance: the No-Action Letter Policy, Trial Disclosure Program Policy, and Compliance Assistance Sandbox Policy. Initially proposed in 2018, the updated policies largely streamline review processes.
The CAS Policy enables testing of a financial product or service where there is regulatory uncertainty. After the bureau evaluates the product or service for compliance with relevant law, an approved applicant that complies in good faith with the terms of the approval will have a “safe harbor” from liability for specified conduct during the testing period.
NALs provide increased regulatory certainty through a statement that the CFPB will not bring a supervisory or enforcement action against a company for providing a product or service under certain facts and circumstances.
Under the new TDP Policy, entities seeking to improve consumer disclosures may conduct in-market testing of alternative disclosures for a limited time upon permission by the bureau.
“Innovation drives competition, which can lower prices and offer consumers more and better products and services. New products and services can expand financial options, especially to unbanked and underbanked households, giving more consumers access to the benefits of the financial system,” Kraninger said. “The three policies we are announcing today are common-sense policies that will foster innovation that ultimately benefits consumers.”
The bureau issued its first NAL in response to a request by the Department of Housing and Urban Development on behalf of more than 1,600 housing counseling agencies that participate in HUD’s housing counseling program.
In 2018, HUD brought concerns to the bureau about HCAs and lenders not entering into agreements that would fund counseling services due to uncertainty about the application of the Real Estate Settlement Procedures Act. The no-action letter essentially states that the bureau will not take supervisory or enforcement action under RESPA against HUD-certified HCAs that have entered into certain fee-for-service arrangements with lenders for pre-purchase housing counseling services.
The NAL, which is an exercise of the bureau’s supervisory and enforcement discretion, is intended to facilitate HCAs entering into such agreements with lenders and will enhance the ability of housing counseling agencies to obtain funding from additional sources.