Washington, D.C. – Congressman Andy Barr (KY-06) reintroduced the Rectifying Undefined Definitions of Abusive Acts or Practices (Rectifying UDAAP) Act which clarifies standards for unfair, deceptive, or abusive acts and practices (UDAAP) at the Consumer Financial Protection Bureau (CFPB). This bill provides long-overdue regulatory certainty for financial institutions and credit providers by requiring the CFPB to define the term “abusive” under the Dodd-Frank Act.
“For far too long, financial institutions have been left in the dark due to the CFPB’s failure to provide a clear and consistent definition of what constitutes an ‘abusive’ act or practice,” said Congressman Andy Barr. “This regulatory ambiguity leads to decreased innovation and reduced access to credit, which ultimately harms consumers by reducing their choices and increasing costs. My legislation will bring much-needed transparency to the CFPB’s UDAAP authority, ensuring financial institutions can serve their customers without fear of arbitrary enforcement actions.”
“The CFPB’s repeated attempts to exceed its statutory authority in recent years, including its overly aggressive approach toward ‘abusive’ practices, have caused real harm to banks and to the customers and communities they serve,” said American Bankers Association President and CEO Rob Nichols. “Chairman Barr’s Rectifying UDAAP Act would establish clear boundaries around the Bureau’s authority while ensuring that discriminatory practices continue to be governed by our nation’s anti-discrimination laws – not by the whims of regulators. We urge Congress to pass this legislation to help end the era of the unchecked, unaccountable CFPB and ensure that the Bureau’s actions moving forward truly serve and protect consumers.”
“CBA has long called for greater clarity and transparency regarding the Bureau's unfair, deceptive, or abusive acts or practices (UDAAP) authority. For too long, UDAAP has been largely undefined and enforced based on the personal preferences of the Director. On behalf of America’s leading retail banks, we commend Rep. Barr for his leadership on this critical issue – the Rectifying UDAAP Act will put in place guardrails that are much needed to provide clear rules of the road and continue to allow banks to serve millions of Americans each and every day.” – CBA President and CEO Lindsey Johnson
“Under the previous administration, the Consumer Financial Protection Bureau exceeded its statutory authority under UDAAP and thereby threatened continued access to the products and services on which American consumers depend,” ICBA President and CEO Rebeca Romero Rainey said. “ICBA and the nation’s community banks strongly support Rep. Barr’s Rectifying UDAAP Act to bring much-needed clarity, balance, transparency, and accountability to CFPB oversight.”
“The consumer credit industry works to ensure that tens of millions of American consumers can have confidence in their access to the credit they need, whether in buying a new home or vehicle or smaller purchases that enhance their lives,” says Celia Winslow, President-elect of the American Financial Services Association. “Representative Barr’s legislation, in turn, provides our industry with clarity and certainty when working to meet customers’ needs, to expand access to credit for as many American consumers as possible, and adhering to the rules of the road. This certainty and accountability in the regulatory space has long been lacking and we appreciate Representative Barr’s leadership on this issue.”
“For too long, the CFPB has used its UDAAP authority to exert regulatory power well beyond what Congress intended. Undefined guidance has created an environment that impedes credit unions from supporting their communities due to fear of violation. America’s Credit Unions applauds Rep. Barr’s efforts to rein in the CFPB’s regulatory overreach. We look forward to clear operating guidelines that will allow credit unions to focus without fear in their efforts to advance communities and support the financial well-being of American families.” – Jim Nussle, America's Credit Unions President/CEO
By requiring the CFPB to establish clear parameters for UDAAP enforcement, the Rectifying UDAAP Act will foster a more predictable regulatory environment, enabling banks, credit unions, and other financial service providers to better meet the needs of consumers while maintaining strong consumer protections.
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