Goodwin Year-in-Review Forecasts Paradigm Shift for Consumer Finance Industry Under New Administration and CFPB Leadership

Global law firm Goodwin today announced the release of its sixth annual Consumer Finance Year in Review. Produced by the firm’s Consumer Financial Services Litigation and Enforcement + Government Investigations practices, the in-depth report analyzes the regulatory, litigation, and enforcement actions faced by the U.S. consumer finance industry over the last year and provides outlooks on what the industry can expect in the year ahead under the new presidential administration and Consumer Financial Protection Bureau in the areas of fintech industry regulation; mortgage origination and servicing; the Telephone Consumer Protection Act; credit, debit and prepaid cards; student and auto lending; credit reporting practices; payday/small dollar lending; debt collection and settlement; and more.

 

Anthony Alexis, head of Goodwin’s Consumer Financial Services Enforcement practice co-author of the report, said: “We are looking ahead at a substantially reshaped regulatory and enforcement agenda under the new presidential administration and new CFPB leadership in 2021. By the end of the year, we anticipate an increase in enforcement activity and consumer-friendly regulation in key areas such as debt collection, auto lending, mortgages, payday and small-dollar lending, and student lending.”

 

“COVID-19 had a profound effect on every segment of the consumer finance industry and every industry stakeholder as federal and state policymakers moved swiftly to offer financial relief to consumers and regulatory relief to companies,” said Kyle Tayman, Goodwin partner and co-author of the report. “As the impacts of the pandemic carry into 2021, financial institutions should be mindful of the end date of such COVID-19 guidance and prepare for any relaxed measures to tighten back up again.”

 

The report’s key findings include:

• Years-Long Decline in Enforcement Reversed: The number of publicly announced enforcement actions increased in 2020 (111 actions, up from 78 in 2019), representing a change in direction from the steady decrease of activity since 2015. Activity in 2020 included a 53% increase in federally enforcement actions (75 actions, up from 48 in 2019).
• CFPB Led Enforcement Activity, Impacted by SCOTUS. The CFPB led this uptick in enforcement, more than doubling the number of actions (52 in 2020, up from 24 in 2019). The 2020 Supreme Court decision in Seila Law LLC v. CFPB No. 19-7 will have the most significant long-term impact on the CFPB’s enforcement agenda. As a result of the decision, the President can remove the CFPB director at will, allowing the CFPB’s agenda to more directly mirror that of the current administration going forward, bringing even more significance to this year’s administration change.
• California to Lead Way in State-Level Enforcement. While enforcement actions brought by state agencies and jointly by federal and state agencies decreased (36 state actions and 7 joint actions in 2020, down from 30 and 13, respectively, in 2019), California, Massachusetts, and New York continued aggressive enforcement, initiating almost as many publicly announced actions than all other states combined. California’s new Department of Financial Protection and Innovation, dubbed a “mini CFPB,” assumed the mantle as the most powerful enforcement actor going forward and is expected to hit the ground running in 2021.

 

View the full report here.

 

Goodwin’s Consumer Financial Services Litigation and Enforcement + Government Investigations practices advise many of the nation’s largest financial institutions, including prominent banks, mortgage servicers, credit card issuers, and insurers on a host of consumer finance issues. The practice is ranked one of the top firms in the U.S. by Chambers USA, which notes Goodwin’s “longstanding reputation as an exceptionally strong consumer finance litigation firm.” Goodwin is also among Legal 500’s Top Five Consumer Finance Litigation firms.