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Post-Election 2016: What's on the horizon for the financial services industry?

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Election season is over, and for the first time in eight years we will have a new administration in the White House. So what’s in store for the financial services space? This presentation reveals insights from experts in Washington on what to expect from regulators over the next year.

Published in: Economy & Finance
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Post-Election 2016: What's on the horizon for the financial services industry?

  1. 1. ©2016 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are trademarks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Inside the Beltway Webinar | November 17, 2016 Post-Election 2016: What’s on the horizon for the financial services industry?
  2. 2. 2©2016 Experian Information Solutions, Inc. All rights reserved. • CFPB Update • Financial Regulatory Reform? • Access to Credit Agenda • OML Regulatory Horizon • State Update • Q&A session Today’s Discussion Agenda
  3. 3. 3©2016 Experian Information Solutions, Inc. All rights reserved. Speakers Government Affairs and Public Policy Liz Oesterle Senior Director Murray Johnston Director Jeremy Hancock Director Zack Smith Manager Tony Hadley Senior Vice President
  4. 4. 4©2016 Experian Information Solutions, Inc. All rights reserved. Consumer Financial Protection Bureau Rulemakings impacting consumer credit ecosystem Payday, vehicle title and high cost Installment loans Public comments under review Debt collection Proposed rule in early 2017 Credit Reporting Data accuracy; dispute resolution
  5. 5. 5©2016 Experian Information Solutions, Inc. All rights reserved. Data Accuracy and Consumer Disputes Credit Reporting Agency Data Furnisher Data User
  6. 6. 6©2016 Experian Information Solutions, Inc. All rights reserved. What’s driving the focus on data accuracy? 2013 FTC longitudinal study 2.2% of credit files contained a material error that would move a consumer to a different score band reflecting a higher risk 5.2% of consumers are affected by a material error, reflecting that consumers have three reports and not all reports contain an error 21% of credit reports contained an error that did not materially affect their score 26% of credit reports were alleged to contain an inaccuracy
  7. 7. 7©2016 Experian Information Solutions, Inc. All rights reserved. Data Accuracy and Consumer Disputes Credit reporting complaints:  Incorrect information on a report (79%)  Consumer reporting agency investigation (8%)  Inability to obtain report and score (6%)  Problems with credit monitoring or identity protection services (4%)  Improper use of credit report (3%) 35% Mortgages Credit cards 8% 19% Debt collectors Bank account Credit reporting Other 31% 8% 20% 14% Complaints handled in 2015
  8. 8. 8©2016 Experian Information Solutions, Inc. All rights reserved. Bank 1: 50M Experian: 220M CFPB May 2016 Report December 2015 – February 2016 Average Monthly Complaints 1014 911 765 754 736 685 541 322 316 283 Equifax Experian TransUnion Bank 1 Bank 2 Bank 3 Bank 4 Credit Card Co. Servicer Mortgage Co.
  9. 9. 9©2016 Experian Information Solutions, Inc. All rights reserved. Debt Collection Practices Report the name of the original creditor and creditor classification code (June 2016) Collectors cannot report debt that did not arise from a contract or agreement to pay (June 2016) Collectors cannot report medical collection accounts less than 180 days old (September 2017) Multi-state Agreement Assuring maximum possible accuracy
  10. 10. 10©2016 Experian Information Solutions, Inc. All rights reserved. Multi-state Agreement Assuring maximum possible accuracy All Data Furnishers • Retirement of Metro 1 (September 2017) • Minimum reporting requirements for consumer identifying information (September 2017) • In routine collection and reporting of consumer credit information • Full month/date/year of birth for authorized users
  11. 11. 11©2016 Experian Information Solutions, Inc. All rights reserved. CRA Duties • Streamlined application form and enhanced consumer education materials on AnnualCreditReport.com • Enhanced escalation of dispute involving mixed files and identity fraud • Improved communications to consumers following a consumer dispute Multi-state Agreement Improving the customer experience
  12. 12. 12©2016 Experian Information Solutions, Inc. All rights reserved. Financial Regulatory Reform Congressional Committees have passed legislation that will serve as a marker for consideration by the next Congress and Administration • The Senate Banking Committee passed The Financial Regulatory Improvement Act in May 2015. • In September 2016, the House Financial Services Committee passed the Financial Choice Act. • Both measures, passed on party-line votes, include reforms to Dodd-Frank and would make changes to the CFPB’s governance and funding structures. What reform provisions will Senate Democrats support? • Community bank and credit union relief • Roll back of auto finance guidance In the background of this debate: PHH v. CFPB • The unconstitutionality of the CFPB’s single-director structure;
  13. 13. 13©2016 Experian Information Solutions, Inc. All rights reserved. H.R. 347 – Facilitating Access to Credit Act of 2015 Would free CFPB-supervised credit bureaus to introduce next-gen consumer education products into the marketplace by removing barriers required by the Credit Repair Organizations Act H.R. 4172 and S. 2355 – Credit Access and Inclusion Act of 2015 Would remove regulatory barriers that prevent furnishing consumer payment histories to credit bureaus for telecommunication, utilities and rental bills H.R. 4211 -- The Credit Score Competition and Equal Access Act Would require Fannie Mae and Freddie Mac to establishing a transparent and open process for the validation and approval of credit score models Congressional Access to Credit Agenda
  14. 14. 14©2016 Experian Information Solutions, Inc. All rights reserved. Congressional Access to Credit Agenda Alternative Data A May 2015 report from the CFPB estimates that there are roughly 45 million “credit invisibles” in the U.S. Alternative data is payment information for: • Rent • Telecommunications (phone, cable and wireless) • Utilities (electric, gas, water) Telecoms / Utilities report derogatory but not on-time payments, or the full file Credit invisibles are consumers with no or “thin” credit files that cannot be scored
  15. 15. 15©2016 Experian Information Solutions, Inc. All rights reserved. Congressional Access to Credit Agenda Credit score competition Fannie Mae and Freddie Mac underwriting guidelines require use of a specific branded credit score • Pre-recession credit behavior • Older software Score competition would allow lenders to chose among alternative score models to: • Improve risk prediction with newer scoring technology/more granularity • Score more consumers
  16. 16. 16©2016 Experian Information Solutions, Inc. All rights reserved. Congressional Access to Credit Agenda Credit Building and Recovery through CROA Reform Personalized Credit Education Consumers are directed to Experian by the disclosures on reports and scores, but CROA’s misapplication stands in the way of further education when the consumer asks: “How can I improve my score?” What is the Credit Repair Organizations Act (CROA)? • Enacted in 1996 to protect consumers from “credit repair” scams • “Credit Repair”: Fraudulently representing to consumers that an entity can remove accurate, but negative data from a consumer’s file. Often for an exorbitant fee. • 3 business day waiting period • Onerous/scary consumer disclosure • Complete disgorgement of funds as remedy ?
  17. 17. 17©2016 Experian Information Solutions, Inc. All rights reserved. • Growth and lending models have caught the attention of regulators • Continued inquiries by Treasury, CFPB, FDIC, FTC, States and Congress • OML/FinTech as part of Congressional Innovation Agenda • Madden fix • Automate IRS Income Verification Data • Regulatory Sandbox OML Regulatory Horizon More regulations to come?
  18. 18. 18©2016 Experian Information Solutions, Inc. All rights reserved. State Update what to expect in 2017 There is growing concern that laws will not keep pace with the increasing use of consumer information. • Tightening of data security standards • Shifting expectation of sensitive information There is a blurring of the distinction between identifiable information and anonymous or de-identified information
  19. 19. 19©2016 Experian Information Solutions, Inc. All rights reserved. Questions?
  20. 20. 20©2016 Experian Information Solutions, Inc. All rights reserved.

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