The CFPB has issued a notice regarding its plans to conduct an assessment of its remittance transfer rule which became effective on October 28, 2013.
The assessment is being conducted under Section 1022(d) of the Dodd-Frank Act which requires the CFPB to conduct an assessment “of each significant rule or order adopted by the Bureau under Federal consumer financial law.” The assessment must include a review of “the effectiveness of the rule or order in meeting the purposes and objectives of [Title X] and the specific goals stated by the Bureau.” The CFPB must publish a report of its assessment “not later than 5 years after the effective date of the subject rule or order.” The notice lists six issues on which the CFPB seeks information and other comments. Comments must be received on or before 60 days after date the notice is published in the Federal Register.
According to the notice, the CFPB’s reasons for designating the remittance rule “significant” for purposes of Section 1022(d) include the estimated aggregate annual compliance costs and the CFPB’s expectations for the rule “to have important effects on remittance transfer service features, provider operations, and the overall market,” such as those resulting from the rule’s new error resolution procedures. The CFPB plans to focus its assessment on two areas: (1) whether the remittances market has evolved after the rule in ways that promote access, efficiency, and limited market disruption by considering how remittance volumes, prices, and competition in the remittance market may have changed, and (2) whether the rule’s consumer protections have brought more information, transparency, and greater price predictability to the market.
In conducting the assessment, the CFPB seeks to compare consumer outcomes to a baseline that would exist if the rule’s requirements were not in effect (something the CFPB acknowledges is “challenging” to do). The CFPB may also seek to compare outcomes observed with the rule “to counterfactual outcomes” if specific elements of the rule were not in effect, such as “the effects of specific amendments, provisions, or exceptions, which only makes sense when compared to a baseline in which the balance of the Remittance Rule is in effect.” The data that the CFPB plans to use includes its consumer complaint database, information obtained from CFPB supervisory and enforcement activities, and information provided by banks and credit unions in call reports. The CFPB also intends to interview market participants.