RSSThe Consumer Financial Protection Bureau plans to stop using civil penalty funds to finance consumer education and financial literacy programs, according to a proposal published June 18.
The rule allowing such funds to be used for financial education programs was established in 2013. The CFPB has allocated $3.6 billion to victims from the civil penalty fund since, with $28.8 million going to consumer education and financial literacy from 2013-16.
According to American Banker, the CFPB has only funded a single program, which provides financial coaching for military veterans, military widows and widowers along with economically at-risk consumers to develop their money management skills. The bureau had a contract with Arlington, Va.-based military service provider Magellan Federal that ended in 2023.
“The bureau now believes that the 2013 rule provides neither adequate guardrails for the agency’s exercise of its discretion nor adequate transparency to the public regarding a potentially significant expenditure,” said CFPB Acting Director Russell Vought. “In the absence of adequate guardrails, there could be incentives to bring enforcement actions for the purpose of aggrandizing the original scope of the agency.”
The bureau will accept public comments on the proposed reversal until July 18.
