The Consumer Financial Protection Bureau ("CFPB")
recently launched its latest initiative, Project Catalyst.
According to CFPB director Richard Cordray, Project Catalyst was
designed to "encourage innovation in consumer finance" by
targeting two goals—communication and collaboration between
the agency and the marketplace. First, the CFPB seeks to
communicate generally with the consumer finance industry to help
the agency understand how current and future regulation affects
consumer-friendly product innovation. Second, the CFPB hopes to
collaborate with the industry through data-sharing and involvement
at the product level. For instance, the project seeks collaboration
between the CFPB and market participants on disclosure testing for
new products.
As one of the country's leading payment systems lawyers, Jones
Day's Veronica McGregor was invited to the participate in the
project's official launch in November. Ms. McGregor
participated in discussions with the agency, investors,
entrepreneurs, and others representing the "innovator
community," as characterized by Mr. Cordray, including
representatives from large companies, such as Google, PayPal, and
Facebook, as well as smaller businesses. Ms. McGregor reports that
the agency was seeking "useful information to inform their
task of developing a plan to deal with companies that fall into the
gray area of regulation while still protecting consumers."
Through informal discussions, the CFPB sought input in several
areas, including mobile payments, student lending, emerging trends,
and short-term liquidity.
At the meeting, Ms. McGregor observed that the CFPB was
particularly interested in whether the balance of adequate customer
protection and innovation is better served through proscriptive or
descriptive regulations. And whether—within those
regulations—the CFPB should be specific or provide general
outlines. Further, Ms. McGregor notes that Project Catalyst appears
appropriately focused on practical discussions with industry
leaders to guide regulation. In fact, the discussions were led by
moderators representing the industry, not the CFPB. As a
continuation of the project launch, the CFPB expects to make its
staff available on a regular basis for "office hours,"
giving market participants an opportunity to engage the
agency.
The collaboration sought by the CFPB may require communication of
sensitive information to the agency. In an effort to curb any
concern over public disclosure, the CFPB states on its web site
that it will not voluntarily release information provided through
Project Catalyst. The CFPB mentions that the information may be
subject to the Freedom of Information Act, but the agency announced
that it will assert exemptions for trade secrets, confidential
commercial information, and personally identifiable information
where appropriate. Companies looking to discuss new, or existing,
financial products with the CFPB should seek advice from counsel
and, if possible, specific assurances from the CFPB before
disclosing sensitive information.
Jones Day's Consumer Financial Products & Services team
advises clients on regulatory issues, including counseling clients
regarding interaction with the Consumer Financial Protection
Bureau.
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