The CFPB has issued a request for information (RFI) that seeks comments from the public “on what customer service obstacles consumers face in the banking market, and specifically what information would be helpful for consumers to obtain from depository institutions pursuant to section 1034(c) of the Consumer Financial Protection Act.“ Section 1034(c) requires depository institutions subject to CFPB supervision (i.e. those with more than $10 billion in assets) to provide timely responses to consumers requests for information about a financial product or service that the consumer obtained from the depository institution.
The RFI appears to stem from the CFPB’s view that large banks are not providing consumers with adequate service and “are increasingly shifting toward algorithmic banking and away from relationship banking.” As described by Director Chopra in remarks about the RFI, “relationship banking is a model used to serve families, businesses, and communities as individuals, with an emphasis on providing customized help, rather than assembly-line style service.” He described algorithmic banking as a model “which relies on using vast quantities of data about an individual through tracking and surveillance to make predictions about their behavior and banking habits. Advanced computational models make determinations about what products will be offered to you and whether you will be approved.” He also stated that he “expect[s] that we will see more and more of this type of banking as Big Tech conglomerates enter financial services.” The CFPB’s press release calls the RFI “part of a broader effort to restore relationship banking in an era of consolidation and digitization.”
In his remarks, Director Chopra also linked the RFI to the CFPB’s overall concerns about potential consumer harm arising from fintech, stating that the CFPB “is working to ensure that algorithmic banking is not being given special treatment and must follow the same set of rules that relationship banks follow.” He referenced the CFPB’s May 2022 Circular addressing ECOA adverse action notice requirements in connection with credit decisions based on algorithms and the November 2021 orders sent by the CFPB to six large technology platforms offering payment services that directs them to provide information to the Bureau about their payments products and services and their collection and use of personal payments data.
The issues on which the CFPB seeks comment include:
- The types of information consumers request from their depository institutions and how consumers are using that information
- The types of information that consumers are currently unable to obtain from their depository institutions
- How the channel used by a consumer to request information impacts the consumer’s ability to obtain information and impacts the consumer’s customer service experience
- The customer service obstacles that consumers have experienced that have adversely affected their ability to bank
- Typical call wait times and frequency of dropped or disconnected calls and use of automated and digital communication channels
- Fees associated with customer service or requests for information
- The value of consumers having access to various types of account information
The CFPB’s press release states that the comments it receives in response to the RFI “will inform future policy guidance and other initiatives regarding the rights outlined in Section 1034(c).” While the requirements of Section 1034(c) are limited to depository institutions with more than $10 billion in assets, Director Chopra’s remarks suggest that the CFPB will likely seek to make such policy guidance applicable all banks. He stated that “[i]n the end, the CFPB wants institutions of all sizes to foster an inclusive relationship banking model that meets consumers’ reasonable expectations of good customer service and enables consumers to hold financial intuitions accountable when they encounter problems.” However, given that the CFPB’s supervisory and enforcement authorities are also limited to depository institutions with more than $10 billion in assets, to the extent the CFPB seeks to create customer service standards by way of its UDAAP authority, it would need to enlist the cooperation of the prudential regulators to impose such standards on smaller institutions.
Comments in response to the RFI must be submitted no later than July 21, 2022.
In response to the RFI, the Consumer Bankers Association issued a statement from Richard Hunt, its President and CEO, in which Mr. Hunt commented that “It’s unfortunate the Bureau continues to advance their own pre-determined narrative not based on facts or reality and without recognition of the significant impact bankers have in the lives of the very people the agency is tasked with serving.” Mr. Hunt pointed to several recent surveys showing high levels of consumer satisfaction with their banks.
The CFPB’s invocation of the consumer right provided by Section 1034(c) is yet another example of the agency’s willingness to use every tool in its toolbox to pursue its priorities. However, we question whether Section 1034(c) is in fact an appropriate tool for the CFPB to use for the purpose of launching what its press release calls an “initiative to improve customer service at big banks.”