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In recent months, the future of the US Consumer Financial Protection Bureau (CFPB) has become thoroughly uncertain.
Navigating the whirlwind of political changes has been overwhelming for policy specialists and compliance experts alike, as everyone tries to piece together what to comply with, and what to prepare for.
What was once crystal clear, if stringent, now seems uncertain, and plenty of regulations that affect the payments industry and were on their way to becoming actionable rules to adhere to now seem less likely to be imposed.
In February 2025, just weeks after his confirmation as President, Donald Trump fired CFPB director Rohit Chopra, as had been expected, and replaced him on an interim basis with Treasury Secretary Scott Bessent, who halted all agency operations.
Since that point, even more confusion has developed Russell Vought, the director of the Office of Management and Budget, was subsequently inserted as acting head by Trump.
Vought, a conservative analyst, ordered a temporary shutdown and put the regulators staffers on administrative leave.
Subsequently, Jonathan McKernan has been nominated as director. If he is confirmed by the US Senate, then McKernan will replace Vought.
This comes at a similar time as the Trump administration seemingly agreeing to halt layoffs at the agency.
The CFPB has been a target of the Elon Musk-led Department of Government Efficiency, with Musk posting on his social media site X (formerly Twitter) CFPB RIP with a coffin emoji.
The agency's website and social media were at one time largely erased, with a 404 error: not found explanation displayed for some time on the agencys .
Although this has now subsided, uncertainty remains about the future for the CFPB when it comes to staffing and what it prioritises.
There have been leaked messages in the media about a stripped back regulator and issues such as digital payments and remittances no longer getting the same level of regulatory scrutiny as they did previously.
Some new announcements have been made by the CFPB, although these have been clarifications rather than enforcement.
For example, the CFPB that it will deprioritise enforcement of penalties related to the Payment Withdrawal and Disclosure provisions in its small-loan regulation, focusing instead on consumer threats, particularly for service members and veterans, and may also propose narrowing the rules scope.
Separately, the CFPB seeks to vacate its case against Townstone Financial, a small mortgage firm accused of redlining - denying services to residents of certain areas based on their race or ethnicity.
Acting director Vought argued that the case was politically motivated, with no consumer complaints or evidence of discrimination.
The CFPB has now said it will refund Townstones penalty and dismiss the case, calling it an abuse of power and a violation of free speech protections.
The bigger picture
The CFPB was established in 2010 under the Dodd-Frank Act as part of the US response to the 2008 financial crisis.
Senator Elizabeth Warren, one of the most progressive members of the Democratic Party, was key to the bureaus inception and it has always garnered praise from Democrat Representatives.
For example, former House financial services committee chair Maxine Waters said in 2023 that the CFPB has successfully combatted junk fees, relieved the burden of medical debt on consumers credit reports, fought back against housing discrimination and redlining, and held large financial institutions like Wells Fargo accountable for repeatedly breaking the law and harming people across America.
It was created to address widespread consumer financial abuses, particularly in mortgage lending, credit cards and payday loans.
Under the Biden administration, the agency became increasingly interventionist and turned its ire towards the payments industry at times, fining firms for misdeeds and introducing new rules on topics such as digital wallets and buy now, pay later (BNPL).
In contrast to its popularity with Democrats, the CFPB has failed to attract many fans in Republican circles, and right-leaning politicians in the US have criticised the regulator's structure and reach.
In 2017, Representative Jeb Hensarling dismissed the regulator as "arguably the most powerful, least accountable agency in U.S. history", advocating for its dissolution.
Meanwhile, former presidential candidate Senator Ted Cruz has led efforts to defund the bureau, describing it as an "unelected, unaccountable bureaucratic agency".
Yet the CFPB has at times garnered praise from some Republican politicians, including for its work regarding open banking.
In October 2024, for example, former Representative Patrick McHenry said that the CFPBs final , which enabled financial data rights and made way for open banking, is a promising step forward to protect Americans financial data privacy.
McHenry also said it was progress for American innovation and consumers.
Key considerations
Changes to the CFPBs enforcement appetite will be consequential for payments players.
In November 2024, the CFPB to supervise large non-bank digital payment firms, making way for compliance with federal laws on privacy, fraud and debanking.
Non-bank digital payment platforms with more than 50m annual transactions were expected to be subject to supervision from this.
A , enabling open banking in the US through a legal framework, was issued on October 22, 2024. This requires financial institutions to provide consumers with free access to their financial data for transfer to other providers.
Compliance is supposed to begin on April 1, 2026 for the largest firms, with smaller firms phased in until April 1, 2030.
The CFPB also issued an classifying BNPL lenders as card issuers under Regulation Z, making them subject to credit card dispute and refund regulations in 2024.
And earlier this year, it to ban coercive contract clauses in financial agreements, prohibiting waivers of consumer rights, unilateral changes and restrictions on free speech.
Whether some, or all, of this gets dropped, remains to be seen. However, it is clear that Republicans and other stakeholders in the financial services industry want to see the regulator take a different approach.
During a recent public hearing, Republicans praised the CFPBs shift under the Trump administration, with Representative Andy Barr (R-KY) criticising its previous leadership as opaque and abusive.
He argued that under Chopra, the CFPB overregulated businesses, pursued aggressive enforcement without evidence and prioritised politics over sound policy.
This viewpoint was supported by industry stakeholders, who highlighted the need for more transparency and accountability.
Why should you care?
Considering all this, there is likely to be a pivotal shift in what the CFPB prioritises in the coming years.
The regulator is seemingly entering a phase of deregulation, with a focus on accountability, transparency and a more restrained enforcement strategy.
The CFPB has already deprioritised enforcement in key areas, such as penalties on small loan providers and the Townstone case, and investigations may now require stronger evidence of wrongdoing, marking a shift away from the more aggressive regulatory stance seen under the previous administration.
Large fines could also decrease, with enforcement focusing more on negotiation and corrective measures rather than punitive penalties, which would align with Republican concerns about overreach and industry calls for a more predictable regulatory environment.
This could mean that regulatory changes become more structured and measured, with fewer announcements via speeches or blog posts.
Additionally, Republicans, with a majority in the House and the Senate currently, may push to bring the CFPB under congressional control to limit its independence.
Although this could lead to a more bipartisan regulatory approach, it may also create legislative gridlock over the agencys authority and future direction once the majority changes after mid-term elections take place.
This less aggressive approach will be welcomed by some in the financial sector, especially those that have felt targeted by the CFPB, such as credit unions and digital payment companies.
However, less enforcement, or a reduction in rules, could also negatively affect parts of the industry, such as fintechs.
For example, Section 1033, the open banking rules, is key to enabling open banking by requiring financial institutions to give consumers access to their data.
Without enforcement, banks could delay or limit third-party access.
In addition, a lack of enforcement could result in uncertainty for investors and fintechs that have built products around open banking.
Some firms had opted to invest into the US because of this regulatory change, and now may hesitate to invest more, which could hinder innovation and would be more of a win for incumbents in payments and banking.
In these coming months, certainty at the CFPB will be crucial and whatever shape it takes, firms will be keen to adapt so that they can respond to a rapidly changing environment at federal level.
