CFPB and European Commission joint statement – a cautious transatlantic first date

The US Consumer Financial Protection Bureau (CFPB) and the European Commissioner for Justice and Consumer Protection have issued a joint statement announcing the start of an “informal dialogue” between the two regulators.  The statement, issued on July 17, focuses on how technology is impacting consumers of financial services across a wide range of areas, from privacy and payments to competition and customer service.

Their underlying concern? That, if left unchecked, technology could increase consumer exposure to fraud and manipulation, while decreasing competition and fair pricing.

This announcement signals an increased coordination between two powerful consumer regulators that could have important ramifications for global financial institutions and financial services companies.

By meeting at least once annually and holding staff discussions and roundtables, together with buy-in from consumer groups and industry representatives, the two agencies intend to share “insights and experience,” exchange technical expertise, and coordinate on pressing policy issues, such as:

• The risk of data misuse, privacy violations and discrimination linked to the deployment of AI and automated decision-making
  
  
• Combating the risk of over-consumption and over-indebtedness in relation to new forms of credit, such as “Buy Now, Pay Later” products
  
  
• Ensuring that vulnerable groups, like the unbanked and underbanked, are not left behind by digital transformation
  
  
• The implications of Big Tech companies offering financial services to consumers, including for data security, financial stability, and privacy.

At this point, it is unclear what fruit this dialogue will ultimately produce. While the statement seems to downplay the prospect of any immediate concrete outcomes (including any reporting on discussions), policy initiatives or enforcement objectives, an effective collaboration would set the stage for these events in the future. At the same time, the statement’s declaration of intent anticipates that the regulators will seek to function more like their market counterparts, on a linked-up and, most importantly, international footing. Though regulation is unlikely to ever match the pace of technological developments, this coordination may help to start levelling the playing field. This ultimately may raise the stakes for financial services entities with operations in both the US and EU.

The transatlantic discussion may also incentivize other countries to follow suit and consider these issues in greater depth. In particular, the United Kingdom, as a top global financial hub, will likely wish to be aligned with discussions and outcomes that could significantly impact the financial sector. The scope of the CFPB and European Commission’s discussions may therefore develop over time.

Meanwhile, the emphasis on informal dialogue, combined with the sheer breadth of the topics, suggests a dialogue that will flow, at least for now, at a “deliberate” pace.

Learn more about the implications of this dialogue by contacting any of the authors.