Consumer Lending Compliance in Uncertain Times
June 16, 2025 – ArticlesIn recent months, virtually every regulated industry has witnessed announcements of significant regulatory changes, including the financial services sector.
While the Federal Deposit Insurance Corporation (FDIC), Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have all seen top-level personnel changes that telegraph significant, even generational, changes to those agencies, the Consumer Financial Protection Bureau (CFPB) in particular has come under direct attack.
The White House directed the termination of most of the CFPB staff and dismantled its infrastructure. Proponents argue that the CFPB’s rules and requirements were counterproductive, and that decreased regulatory restraints and costs on service providers will lead to increased innovation, market growth and ultimately higher profits.
Critics warn that the CFPB’s mission remains vital to consumers and market integrity, and have challenged the terminations and related actions in court. Meanwhile, an enforcement vacuum and the lack of necessary adjustments for inflation and emergency measures further complicate an unsettled environment.
Some financial industry participants welcome the relaxation of the regulatory grip, viewing it as an opportunity to innovate and streamline operations, and reassess their risk management strategies and lending practices. Others express apprehension about the unpredictable nature of compliance risks related to these changes that might ultimately be temporary and change from administration to administration and do not outlive the applicable statute of limitations.
Further, relaxed oversight and fewer proactive investigations at the federal level may be counterbalanced by increased state regulatory activity and private litigation. As a result, financial institutions must decide whether to recalibrate their compliance risks and modify lending practices and fee structures without any consensus or long-term predictability of how the current tumult will be resolved.
Without a clear, reliable picture on the ultimate direction of regulation, several recommendations have emerged.
- Ensure transparency through clear communication relating to terms and fees, while updating dispute resolution procedures and protocols.
- Conduct regular, comprehensive internal audits of compliance protocols, lending practices and fee disclosures.
- Establish an external legal partner or internal task force to monitor federal and state litigation trends to stay informed about current and potential future legal challenges.
- Maintain stakeholder communication. Proactively communicating with regulators will promote transparency and build trust that will help ensure that practices, policies and procedures conform to the rules.
As each regulatory environment continues to evolve, the importance of legal preparedness cannot be overstated. Monitoring federal- and state-level developments and engaging with industry associations to influence legislative reforms are proactive steps that organizations can take to safeguard their practices.
Open dialogue within the industry is crucial for addressing specific concerns related to federal and state regulations and enforcement, as well as for discussing practical steps for effective risk management in this time of transition.
The rapidly shifting regulatory changes in the financial services sector present both opportunities and challenges. While reduced regulations may foster innovation and lower costs, they also raise significant concerns about oversight and compliance.
As financial institutions navigate this complex landscape, a balanced approach that prioritizes compliance while embracing regulatory flexibility will be essential for sustainable growth and stability in the industry.
