Proposed Consumer Financial Protection Agency May Oversee FDCPA Enforcement

Industries that must adhere to the Fair Debt Collections Practices Act (FDCPA) may soon have a new federal regulator. The Obama administration is recommending that the Federal Trade Commission (FTC) turn enforcement of laws that protect consumers over to a new Consumer Financial Protection Agency, the cornerstone of recently-announced regulatory changes in the financial sector.  

The regulatory shift would include FDCPA enforcement, impacting all debt buyers and collections agencies, according to consumer advocates familiar with the plan.  

The White House says the agency, if created by federal lawmakers, will have broad authority to regulate products such as mortgages, credit cards, and other consumer financial products and regulate all providers of consumer financial products and services.

Among other things, the new agency will be responsible for:

• promoting concise and clear information for consumers
• protecting consumers from unfair and deceptive practices 
• promoting fair, efficient, and innovative financial services markets for consumers 
• improving access to financial services
  

At least six consumer advocate groups support the creation of the new agency as the primary consumer protection czar.

“It will have more authority and more power in many ways than the FTC because it will have only one job and that’s enforcing consumer laws,” said Ed Mierzwinski, consumer program director of U.S. PIRG.

Currently at least seven federal regulatory agencies are responsible for protecting consumers in the financial services marketplace. Five of the agencies also oversee financial institutions. To fund the Consumer Finance Protection Agency, the Obama Administration has recommended that the Office of Thrift Supervision be eliminated and its duties transferred to other agencies. Other regulatory agencies will also be affected.

Congress must approve the creation of the new agency. A bill introduced by Rep. Bill Delahunt (D-Mass.) to create and fund the agency is currently before the House Financial Services Committee. The committee held its first hearing on the bill Wednesday.

Mierzwinki, who testified Wednesday before the committee, said the FTC has a lot of competing responsibilities, including enforcing rules for children’s television programming, evaluating mergers and regulating violations of the Do Not Call List. He said the new agency will eliminate the conflict of interest some agencies face when trying to ensure the safety and soundness of a financial institution.