Under pressure from Republican legislators to specify what he implied by “junk fees”—a term created by the bureau as part of a media project—CFPB Director Rohit Chopra would not use any official meaning. Asked by Rep. Andy Barr (R-Ky.) if he might use “any legal or statutory authority that defines ‘junk fees,’” Chopra responded: “No. Junk fees are something that everyone experiences at so many parts of their financial life.”
Elsewhere throughout the hearing, he stated it describes “a fee for a service that you didn’t ask for and didn’t necessarily want . . . or a fee that doesn’t feel like it’s subjected to the competitive process.” Chopra used as examples “pay to pay” charges, where customers are needed to pay a charge in order to finish a payment deal, or “payoff statement fees,” where customers are charged a charge in order to get the reward quantity on an amortizing loan.
In a highly worded op-ed released in American Banker the other day, ABA President and CEO Rob Nichols knocked the CFPB’s project versus these so-called “junk fees,” calling it “little more than a PR effort designed to confuse the public about the well-disclosed fees they currently pay and to undercut an industry simply following the regulator’s own rules. The fees the CFPB continues to highlight, including late fees and overdraft fees, are already required to be ‘clearly and conspicuously’ disclosed under existing rules, and banks are watched carefully for compliance.”
During the four-hour hearing today, Chopra likewise talked about the execution of Section 1033 of the Dodd-Frank Act, which resolves customers’ rights to gain access to and control info about their accounts, keeping in mind that it is a leading concern for the CFPB.
While he did not offer a particular timeline, he kept in mind that the “hope is to get the next step” in the rulemaking procedure “done within a year.” That next action need to be the recognition of little banks, cooperative credit union and fintechs that will supply feedback on an overview of propositions the CFPB is thinking about.
Calling the 1033 effort “one of the most important rules that the CFPB can do,” Chopra kept in mind that it “has the ability to open up consumer opportunities,” and would “take some important steps toward open banking,” however acknowledged that there are “tough issues” associated to information personal privacy and security that will require to be attended to.
“We really all want to think together about: how do we get to a world that is more ‘open banking’—that people can switch more seamlessly, that people can compare more products across a broader range of participants. I see a lot of upside there,” Chopra stated. However, “I do worry about big tech firms really modeling what we’re seeing in China with Alipay and WeChat Pay,” he included. “The fact that you have these dominant providers that have so much data about people’s movements, about people’s geolocation . . . it raises a lot of questions about: will there be a fair system and a transparent system?”
ABA has actually long supported customers’ capability to share their monetary information however continues to stress the value making sure that it is performed in a protected manner in which offers customers bank-level security, openness, and control.