NY Launches State-Level Consumer Financial Protection Division

NY Launches State-Level Consumer Financial Protection Division

On April 29, 2019, the Department of Financial Services for the state of New York (NYFDS) formally announced the launch of the Consumer Protection and Financial Enforcement Division (CPFED) by appointing Katherine Lemire as its Executive Deputy Superintendent. According to the press release, the CPFED:

“…is responsible for protecting and educating consumers and fighting consumer fraud, as well as ensuring that regulated entities comply with New York and federal law in relation to their activities serving the public.”

The creation of this new division follows public disappointment from leadership of the NYFDS with policy changes at the Consumer Financial Protection Bureau (CFPB) under the current administration. The newly-created CPFED may allow the NYFDS to address a perceived gap in CFPB enforcement of Fair Lending laws and consumer protection against deceptive practices in the financial services industry.

This development is just the latest example in recent years of how states and other stakeholders are taking a more active role in Fair Lending enforcement. Following are other examples of this trend:

These examples highlight how several states are intent on picking up the perceived slack from policy changes at the federal level, while community organizations are able to leverage a wealth of data and accessible technology to monitor the impact of lenders on their neighborhoods.

The bottom line is that financial institutions need to be cognizant of their exposure to compliance risk under Fair Lending and related financial consumer protection laws regardless of the current presidential administration’s policies.

May 2nd, 2019|