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CFPB to Financial Products Developers: Why Can’t We Be Friends?

CFPB_2tone_Horiz_RGB2The CFPB has put the finishing touches on a policy it hopes will reduce potential regulatory uncertainty for innovative products that promise significant consumer benefits. So as not to stifle this innovation that could prove helpful to consumers—and presumably to keep a watchful eye on the innovations the CFPB feels aren’t consumer-friendly—the agency announced Feb. 18 a process for companies to apply for a no-action letter. The letter indicates that agency staff has reviewed a company’s application “and have no present intention to recommend enforcement or supervisory action with respect to the particular aspects of the company’s product,” thus reducing regulatory uncertainty about new products or services. Startups and established companies can submit application letters.

The bureau, however, is quick to point out that a no-action letter is not a waiver of any regulations, is not binding and can be revoked at any time. Companies granted no-action letters will have them posted on the CFPB’s site with a summary of the company’s request.

“This new policy is designed to improve access to consumer financial products and services that promise substantial consumer benefits,” said CFPB Director Richard Cordray. “We want to foster a consumer financial marketplace where companies develop safe, innovative products and approaches that can help make people’s lives better.”

This policy is the result of the CFPB’s Project Catalyst, announced in 2014, which was created to spur innovation while clearing up any gray areas the product or service might fall into with current regulations, or instances when the innovation includes technology that hasn’t been addressed yet by existing regulations.

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