Consumer rights groups hit out at CFPB sandbox plans

Consumer rights groups hit out at CFPB sandbox plans

Consumer rights groups in the US have slammed a proposal by the Consumer Financial Protection Bureau to create a regulatory sandbox that would enable fintech firms to bypass red tape.

The coalition of 50 public interest groups led by the National Consumer Law Center says the CFPB proposals would create a dangerous precedent in allowing companies to skip important consumer disclosure rules.

In a letter to the CFPB that describes the policy as fundamentally 'unsound', the group argues that the sandbox would far exceed the CFPB's statutory authority, enabling it to sidestep limits condoned by Congress and put consumer protection at risk.

"The proposal appears to permit major changes to consumer protections and disclosure requirements without any compliance with the Administrative Procedure Act (APA), including notice and opportunity to comment by impacted consumers and covered persons," the letter states. "The proposal could result in enabling huge segments of market players governed by the Dodd-Frank Act to avoid disclosure rules and, possibly, other consumer protections guaranteed by the law. Nothing in the governing law permits such a broad undermining of the consumer protections required by Congress. The Bureau should not go forward with this unlawful proposal."

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