Washington, D.C. – This week, Congressman Andy Barr (KY-06) introduced legislation to amend the Consumer Financial Protection Act of 2010 to clarify standards for unfair, deceptive, acts and practices (UDAAP) enforcement actions brough by the Bureau of Consumer Financial Protection (CFPB). This legislation reforms the UDAAP authority granted to the CFPB by the Dodd-Frank Act to provide certainty for lenders and credit providers.  

“Since the Dodd-Frank Act passed, financial institutions and providers have been left without clarity of the definition for the term “abusive,” and inadequate guidance from CFPB on what would constitute a UDAAP violation. Regulatory uncertainty leads to fewer choices and higher prices for consumers, and the agency tasked with protecting consumers should not be complicit in regulation that is causing these outcomes,” said Congressman Andy Barr. “My legislation, the Rectifying Undefined Definitions of Abusive Acts or Practices or the Rectifying UDAAP Act, requires the CFPB to provide the transparency financial institutions need to serve consumers and ensure there is ample access to credit in our consumer markets.” 

“The consumer credit industry ensures that tens of millions of American consumers have access to credit products – from car loans to small dollar installment loans – that benefits them and the U.S. economy,” said Celia Winslow, Senior Vice President of American Financial Services Association. “Clear and certain rules of the road for our industry ensure that the largest number of consumers can get the credit they need from reputable and ethical lenders. Congressman Barr’s proposal ensures the CFPB adds both accountability for the agency and greater clarity to such rules and we strongly support such an approach.” 

“The CFPB has attempted to exert its power well beyond what Congress ever intended, most strikingly with its UDAAP authority,” said CUNA President and CEO Jim Nussle and NAFCU President and CEO Dan Berger. “I applaud Rep. Barr’s efforts to rein in the CFBP’s abuse of this authority to help credit unions continue to advance communities and support the financial well-being of American families.”  

“ICBA and the nation’s community banks have long sought much-needed clarity on the Consumer Financial Protection Bureau’s definition and regulation of unfair, deceptive, and abusive acts and practices within the legal authority defined by Congress,” Independent Community Bankers of America President and CEO Rebeca Romero Rainey said. “We thank Congressman Barr for introducing the Rectifying UDAAP Act to clarify the CFPB’s regulatory authority related to UDAAP and to ensure it does not restrict the ability of community banks to meet the needs of the customers and communities they serve.” 

“It is imperative that Congress better define the Bureau’s UDAAP authority to ensure it acts within its statutory boundaries. If history is any guide, even the most well-intentioned rules without clear expectations can lead to unintended consequences when applied to the marketplace,” said Consumer Bankers Association President and CEO Lindsey Johnson. “Thank you to Rep. Barr for introducing this important legislation which would ensure the Bureau operates beyond reproach while also providing industry with the clarity needed to comply with current and future regulatory requirements.”

“In recent years, the CFPB 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,” said American Bankers Association President and CEO Rob Nichols.  “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. 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. This common-sense legislation would be a win for American consumers and the banks that serve them.”