CFPB Reportedly Planning Dramatic Enforcement Rollback

America’s chief consumer finance watchdog is reportedly scaling back enforcement of financial services companies.

Instead, the Consumer Financial Protection Bureau (CFPB) will focus on threats to members of the military and their families, Reuters reported Wednesday (April 16), citing an internal memo.

As that report notes, this move suggests the CFPB plans to continue its supervision and enforcement activities despite President Donald Trump’s call for the agency’s elimination. However, the memo says the regulator will begin shifting its focus away from things such as student loans, medical debt and digital payments.

“The bureau will focus its enforcement and supervision resources on pressing threats to consumers, particularly service members and their families and veterans,” Mark Paoletta, the bureau’s chief legal officer, wrote in a copy of the memo seen by Reuters.

The memo goes on to say that all previous CFPB documents establishing enforcement and supervision priorities had been rescinded.

The CFPB’s future has been uncertain for much of this year. Trump fired the agency’s former director in February, and then briefly halted all enforcement and supervisory activities and dismissed a wave of pending cases.

Since then, the future of the CFPB has been the subject of ongoing court battles, with House Republicans also introducing legislation that would give Congress greater authority over the regulator.

At a hearing last month, Seth Frotman, former general counsel and senior adviser to former CFPB Director Rohit Chopra, defended the bureau’s mission, testifying that “In the decade since its creation, the CFPB has gotten back more than $20 billion for working people, on a budget that is a fraction of that size.”

Now, per the Reuters report, the agency will be focused less on matters where state-level regulators also have jurisdiction, with plans to reduce the number of supervisory “events” by 50%, sharply scaling back the supervision of nonbanks.

The CFPB will also “deprioritize” its oversight of financial services for prisoners and detainees, peer-to-peer platforms, digital payments and consumer data, Paoletta’s memo said.

Speaking with PYMNTS last month, Amias Gerety, partner at QED investors, stressed that FinTech companies should still adhere to strict compliance standards regardless of the CFPB’s shifting regulatory priorities.

“Even as the compliance obligations may be lessened, that actually puts more pressure on you to be operating in good faith relative to your consumers,” Gerety said. “We’re telling people it’s a little bit easier on compliance, but harder on risk.” Until the CFPB’s direction became clear, Gerety advised caution, adding, “You can’t follow the policy prescriptions. You have to follow the rules, because that’s the part that has legal force.”