On Monday, the New York Department of Financial Services (NYDFS) announced its newly created Consumer Protection and Financial Enforcement Division. NYDFS’s Acting Superintendent Linda Lacewell describes the new division as “a powerhouse.”

The new division is described as follows:

DFS’s Consumer Protection and Financial Enforcement Division is responsible for protecting and educating consumers and fighting consumer fraud, as well as ensuring that regulated entities comply with New York and federal law in relation to their activities serving the public. It is also responsible for developing investigative leads and intelligence in furtherance of the Department’s efforts to enforce the Banking, Insurance and Financial Services laws, with particular focus on the review and response to cybersecurity events and the development of supervisory, regulatory and enforcement policy and direction in the area of financial crimes. Consumer Protection and Financial Enforcement encompasses the Enforcement Division; Investigations and Intelligence Division; Civil Investigations Unit; the Producers Unit; the Consumer Examinations Unit; the Student Protection Unit; and the Holocaust Claims Processing Office. 

The new division will be led by Katherine Lemire, who is a prior compliance consultant and Assistant U.S. Attorney General for the Southern District of New York. Lemire states, “Given the paramount importance of consumer protection and regulatory oversight in the financial marketplace, I look forward to once again re-entering public service and serving the best interests of New Yorkers, while utilizing the expertise and dedication of DFS staff and resources of the Department.”

[article_ad]

insideARM Perspective

The state of New York has always been a stringent advocate of consumer protection. In many ways, New York leads the charge when it comes to regulating the financial services industry on the state level. For example, back in 2014, NYDFS adopted regulatory rules for debt collectors. For the industry, these rules were bittersweet. On one hand, it was helpful to have detailed guidance on what is required and what is not allowed—something that was desperately missing due to the outdated nature of the Fair Debt Collection Practices Act. (The rules, however, have not helped much with the litigation dilemma facing the industry.) On the other, the rules are very prohibitive and make doing business within the state difficult. Next, NYDFS issued its cybersecurity rules for financial services companies in 2017.

After President Donald Trump was elected into office and placed Former Acting Director Mick Mulvaney at the head of the Consumer Financial Protection Bureau, many states began raising concern and vowed that if the federal consumer protection regulator was going to back down, then the states would step up. New York’s recent action is an example of this.

So what can debt collectors expect from this new division? Since regulatory rules are already in place, the new division will likely step up their oversight of the requirements. There is a possibility that consumer complaints will become a more involved process. Debt collectors should also be in communication with their creditor clients as more information is released about this new division’s initiatives, as creditors may choose to change their procedures depending on where this road leads.


Next Article: Protect Your Data with Ethical Hacking (sponsored)

Advertisement