Consumer Financial Protectio Bureau

The Dodd-Frank Wall Street Reform and Consumer Protection Act created the Consumer Financial Protection Bureau (CFPB) (U.S. Department of the Treasury, 2012). The goal of the CFPB is to educate and advocate for the consumer when it comes to financial products and services that are available in the financial markets of the United States (United States Government). They provide education for the consumer as well as enforcement of Federal consumer financial protection laws and regulations.

The CFPB has the power to issue new regulations (designed to prevent unfair, deceptive, and abusive practices in the financial industry), supervise financial institutions, both depository and non-depository, and enforce consumer financial protection laws (Marconi & Singh, 2011). The CFPB is to become the only government agency to regulate the vast array of consumer financial products. The CFPB will have the authority to enforce and create regulations that pertain to consumer finance. In order to enforce these regulations they may impose civil penalties up to one million dollars a day in some situations. Additionally, they can require rescission or reformation of contracts, restitution, damages, and public notification of the violation. (Marconi & Singh, 2011)

In addition to issuing and enforcing regulations and laws, the CFPB sets out to educate the consumer about the types of financial instruments that are available and the true cost of those instruments. They believe that “an informed consumer is the first line of defense against abusive practices”. (United States Government) The goal is to make sure that consumers can compare products side by side and that important information does not get buried in the fine print of documents.

For the many financial service companies in the United States, the creation of the CFPB has the potential to change many of the business practices that they currently employ. Management will have to rethink the way that they present...