Apr 15 2010

An Analysis of the Consumer Financial Protection Act


The United States is poised to follow nations like Ireland, Canada and Australia in formally separating safety and soundness regulation from consumer protection. With a foreword from Prof. William Jackson, Filene research director Ben Rogers sketches the consumer financial protection proposals currently in play and compares them to pro-consumer structures around the world. The conclusion: If international experience holds, credit unions will come out smelling like roses.

There are strong cases for and against a new consumer financial protection regulator (CFPR), but the political momentum is building for establishing one. As with any regulatory change, a CFPR would entail changes and probably some costs for credit unions. The laws that institutions are subject to would not change significantly; instead, they would be administered by a new organization. In addition:

  • Credit unions in Australia, Canada, and Ireland have not been significantly affected by dedicated consumer financial protection regulators. In some cases, credit unions’ demonstrated responsible track record has been used as a public relations tool.
  • In the countries surveyed, credit unions suffered far fewer complaints than other financial sectors.
  • At the time of publishing, credit unions smaller than $10 billion (B) in assets would be exempt from regular financial protection compliance examinations but would still have to report compliance data to a CFPR.

Credit unions’ size and history of dealing responsibly with members seem to have protected most of them from the heaviest burden of the proposed CFPR. Nevertheless, any change is likely to entail new reporting requirements and an unknown level of compliance costs.

Ben Rogers
Managing Director, Research
Report Number 208