Changes coming to consumer loan watchdog
The Office of Fair Lending and Equal Opportunity will no longer pursue discrimination in lending.
A reshuffling of responsibilities within the Consumer Financial Protection Bureau is intended to establish a balance between the representation of users of credit cards and loans across the country and the providers who lend them money.
The Office of Fair Lending and Equal Opportunity is being moved to the office of the CFPB director and refocused on advocacy and education while its oversight and enforcement of discrimination cases are being returned to the CFPB’s division of supervision, enforcement and fair lending, from which it split from after the financial crisis of 2008, according to a Washington Post report.
The CFPB division of supervision, enforcement and fair lending is expected to continue the office’s watchdog role, offering consumers a recourse if lenders refuse credit to qualified borrowers, discourage prospective borrowers from applying for credit, offer less favorable terms of credit or close a credit account based on race or color, religion, national origin, sex, marital status, age or public assistance income.
A spokesperson for the agency claims that the changes will make the Office of Fair Lending and Equal Opportunity no less effective while bolstering efficiencies and consistency, though critics of the changes in responsibilities suggest that they gut many of the office’s powers.
While the CFPB recovered $14 million in compensation for victims of illegal lending during the first half of 2017 and proposed a new rule regulating payday loan “debt traps”, it has also softened its approach in some cases, including its first-ever issuance of a no-action letter to online lender Upstart over the company’s non-traditional credit scoring for applicants who lack an established credit history.
For help knowing what to watch out for when applying for a loan and understanding the pros and cons of various lenders and lending options, especially as new technologies continue to reshape the industry, check out our guides to credit cards, personal loans and mortgages.