A House bill introduced this week would reform the Consumer Financial Protection Bureau’s unfair, deceptive or abusive acts and practices authority under the Dodd-Frank Act to provide certainty for lenders and credit providers, according to its sponsor.
The Rectifying UDAAP Act by Rep. Andy Barr (R-Ky.) would clarify standards for UDAAP enforcement actions brought by the CFPB. The proposed changes require the CFPB “to provide the transparency financial institutions need to serve consumers and ensure there is ample access to credit in our consumer markets,” said Barr, who is chairman of the House Financial Services Subcommittee on Financial Institutions and Monetary Policy.
Earlier this year, a federal judge in Texas granted summary judgment to ABA, the Texas Bankers Association, the U.S. Chamber of Commerce and several other co-plaintiffs in a lawsuit challenging the CFPB’s UDAAP exam manual, which the groups said unlawfully expanded the statutory definition of “unfairness” to encompass discrimination. In a statement in support of the bill, ABA President and CEO Rob Nichols said the bureau has attempted to dramatically expand its regulatory reach beyond its statutory authority, with significant implications for consumers, small businesses, banks and the broader financial services market.
“Chairman Barr’s Rectifying UDAAP Act would more clearly define what the bureau can and cannot do and would rein in the bureau’s overly aggressive stance on ‘abusive’ acts or practices by requiring it to prove intentional misconduct,” Nichols said. “This bill would also make clear that the bureau’s UDAAP authority does not extend to discriminatory practices, which are already governed by our nation’s anti-discrimination laws.”