CFPB’s Cordray Comments on Best Practices, Industry’s Efforts to Protect Consumers
|November 21, 2013
The American Land Title Association applauded remarks made today by Richard Cordray, director of the Consumer Financial Protection Bureau, about the Bureau’s efforts to promote market practices that protect consumers.
While the CFPB does not have statutory authority to enforce industry best practices, Cordray said the Bureau encourages business to promote policies that protect consumers. He made the comments after responding to a question asked by Justin Ailes, ALTA’s vice president of government and regulatory affairs, during Politico’s “Morning Money” event held at the W Hotel.
Ailes asked if the CFPB has entertained thoughts on encouraging market best practices to protect consumers. Cordray said this is something the Bureau has grappled with constantly since its inception.
“The question asked is something that we have asked ourselves,” Cordray aid. “Do we really want the entirety of the bureau to be about the bare minimum, people limping over the threshold of complying with the law?”
He added that the CFPB has had positive dialogue with industry participants, including ALTA, on improving consumer protection. He said this discourse does give the CFPB some ability to improve industry practices beyond compliance with the law.
While not able to enforce best practices, ALTA applauded Cordray’s comments and the need to monitor and learn from consumer complaints. The seventh pillar of ALTA’s “Title Insurance and Settlement Company Best Practices” encourages companies to address consumer complaints to help ensure that when consumers report poor service or non-compliance, these incidents do not go undiscovered.
“Having a process to receive, respond and resolve consumer complaints builds trust with consumers and enhances their experience when buying a home or refinancing a mortgage,” Korsmo said. “We agree with Director Cordray that being responsive to consumer complaints is one of the best ways to manage risk and build business. We appreciate the CFPB’s recognition of these important market standards and look forward to continuing to work with the CFPB in the future.”
Cordray said the CFPB’s consumer complaint database has had a positive impact on industry behavior. To date, the Bureau has received more and resolved more than 230,000 complaints, with more coming in daily.
“It’s as though you’re adding pixels to the picture and it becomes more fine, and more precise, and more accurate in terms of indicating the patterns of what’s happening to consumers out there,” Cordray said. “It’s just common sense. If you hear about a problem from two consumers, it’s very different than if you’re hearing about it from 200 or 2000 consumers. We play close attention to this.”
Cordray continued by saying it is good business to be responsive to consumer complaints as it builds excellent customer service. This translates into customer retention, “which is the cheapest way to build a business and expand business. It helps (businesses) minimize legal, regulatory and reputational risk,” the Bureau chief said.
“That’s a very positive development and we’re strongly encouraging and applauding that wherever we see it, and that’s a way in which I think we are pushing up the quality of what’s going on in the marketplace, apart from any particular rule or enforcement action,” Cordray added.
Korsmo said this is just another sign of why title professionals need to get in front of this and implement Best Practices.
With the CFPB making it clear that banks must ensure that consumers are not harmed—specifically if there is a violation of federal consumer law—it’s vital title professionals implement Best Practices and provide documentation of the policies and procedures that they follow.
From the CFPB’s perspective, lenders can prevent consumers from being harmed by knowing who lenders do business with.
“It’s important for title companies, settlement service providers and attorneys to understand the demands being put on lenders and to be proactive and aware of how the industry will operate going forward,” Korsmo said.