Press Release February 23, 2022

Goodwin Report Forecasts Aggressive Regulation and Enforcement for Consumer Financial Services Industry in 2022

Global law firm Goodwin today announced the release of its seventh 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 in 2021. Drawing on Goodwin’s deep bench of consumer finance expertise, the report provides outlooks on what the industry can expect in the year ahead under the Biden administration and new leadership at the Consumer Financial Protection Bureau (CFPB) 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: “Although enforcement in the consumer financial services space may have been down in 2021 relative to years’ past, the industry must be prepared for new regulations and policy statements that impose onerous compliance obligations, and federal agency pronouncements that portend aggressive enforcement in the year ahead.”

“The impact of COVID-19 remained at the outset of 2021 but began to wane as regulators looked for a return to normalcy. As 2022 gets underway, we are seeing the continued dissipation of regulatory flexibility as agencies prepared to flex their enforcement muscles following down periods from the Trump administration and the pandemic,” said Kyle Tayman, Goodwin enforcement and litigation partner and co-author of the report.

“In particular, mortgage servicing and origination, fair lending, payday lending, and debt collection are among the top priorities for federal and state regulators as the industry begins to return to pre-pandemic norms, and as the Biden administration ramps up consumer protection efforts,” said Levi Swank, Goodwin partner and report co-author.

The report’s key findings include:

  • Enforcement Actions Decrease as Biden Administration Sets Agenda. Goodwin tracked 107 publicly announced federal and state enforcement actions related to consumer finance, representing a slight decrease from the 111 such actions tracked in 2020. The number of actions brought or settled by the CFPB in particular decreased from 2020, as Goodwin tracked only 22 such actions during 2021. This reflects a decline from the 52 publicly announced CFPB actions tracked in 2020. The year-over-year decrease is most likely the result of the time it takes a new administration to re-focus the agency on its new priorities, and the extended delay in confirmation of a permanent Director.
  • State Enforcement Picks Up. Both the number of actions tracked and the number of states initiating at least one enforcement action increased from 2020 to 2021. California and Massachusetts continued to lead state-level enforcement activity, together bringing almost as many publicly announced actions as all other states combined. Though the state actions covered a wide array of issues, a majority of actions concerned either debt collection and debt settlement or student lending or student loan servicing (or both).
  • Federal Recoveries Drop. All told, total federal recoveries amounted to $556 million, a decrease from the nearly $4 billion recovered in 2020. Nearly half of federal recoveries in 2021 came from mortgage origination and servicing matters ($271.1 million), with payday lending and personal loan matters accounting for the second highest contributor ($149 million). These two areas are expected to be a major focus for new regulation and enforcement in 2022.

For more information, download the report.

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.