The news: Banking trade groups responded to the Consumer Financial Protection Bureau’s (CFPB) request for information on banks’ customer service practices with a letter stating that the agency can’t regulate customer service, per Bloomberg Law.
What the letter says: Major banking industry trade groups American Bankers Association, Bank Policy Institute, and Consumer Bankers Association said that the CFPB does not have the authority to create rules or to review how banks provide customer service.
The letter says that the CFPB is misinterpreting its powers under the 2010 Dodd-Frank Act, which states that consumers must be able to get information about their accounts, including in writing, in a timely manner, and that the CFPB has the authority to ensure compliance. But banks claim that stipulation applies only to customer complaints.
Relationships and algorithms: Banks are concerned that the RFI signals that the CFPB has already reached its own conclusions about how banks provide customer service. They fear the information will be used to write up specific guidance on how banks should operate. They claim the CFPB is placing too much emphasis on relationship banking and suppressing algorithmic banking.
If the CFPB is truly trying to limit AI technologies in banking, it would draw a hard line for how the technology could be used. Earlier this year the Office of the Comptroller of the Currency (OCC) advocated the use of AI for regulatory compliance at banks.
Overreaching CFPB: The banks’ response to the RFI comes as tensions mount between the regulatory agency and trade groups. In June, the Chamber of Commerce launched an advertising campaign against the CFPB’s Director, Rohit Chopra.
In this other instance where banks felt the CFPB overstepped their authority, the Chamber of Commerce joined other trade groups—including those involved with the letter on customer service—to commission a paper on the CFPB’s proposed changes to regulations on unfair, deceptive, and abusive acts and practices (UDAAP), which says the CFPB is acting in areas where the laws don’t apply.
The CFPB has vowed it will review a wide range of topics that it claims must be reformed to better protect consumers. They include overdraft fees, open banking regulations, and consumer data protections.
The big takeaway: The response to the CFPB’s inquiry on customer service may be based on a false assumption about the agency’s intentions. But it could affect how banks respond to customers’ desire for greater personalization.
This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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