The Consumer Financial Protection Bureau (CFPB), the primary federal regulator charged with enforcing consumer financial protection laws, recently announced a proposed rulemaking that would require the myriad non-banks subject to CFPB authority to disclose various consumer contract provisions that the CFPB deems potentially harmful on a public registry. These provisions include arbitration requirements; waivers of claims a consumer can bring in a legal action; limits on a company’s liability to a consumer; clauses limiting a consumer’s ability to bring legal actions by dictating the time frame, form, or venue for legal action; limits on the consumer’s ability to voice complaints or post reviews; and other waivers of consumer rights and legal protections.
In UK Financial Regulators to Oversee Critical Third Parties, our colleagues Lee Rubin and Mark Booth discuss the proposed new regime that will grant UK federal regulators a range of powers over third parties that provide critical services to the financial sector.
On October 20, 2020, a consortium of U.S. federal financial regulators (Regulators), issued a proposed rule (Proposed Rule) that, if enacted, would codify that mere supervisory guidance that is not the product of notice and comment rulemaking—e.g., interagency statements, advisories, bulletins, policy statements, and FAQs—does not have the force of law. The Proposed Rule would further clarify that the Regulators will not take enforcement actions (including less draconian supervisory actions, like issuing “matters requiring attention”) based on violations of, or non-compliance with, such guidance.
From September 30, 2019, new guidelines on outsourcing arrangements (Guidelines) issued by the European Banking Authority (EBA) will apply to all outsourcing arrangements entered into, reviewed or amended on or after this date. The Guidelines aim to establish a more harmonized framework for all financial institutions that are within the scope of the EBA’s mandate, including credit institutions, investment firms and payment institutions. All financial institutions must also update all existing outsourcing arrangements in line with the Guidelines by December 31, 2021.
The Guidelines will have an impact that is much wider than just European markets. As large scale outsourcing deals typically benefit global operations, even where deals are being led out of the United States they will need to take account of the Guidelines if European businesses are to be service recipients.
Financial institutions should act now to address the key considerations of the Guidelines: