WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) announced its proposed policy to allow companies to test new consumer disclosures on a case-by-case basis. As part of its Project Catalyst initiative, and in line with its statutory authority, the Bureau’s goal is to encourage banks, credit unions, and other financial services companies to propose and conduct trial disclosure programs.
“As part of our efforts to foster innovation in consumer financial markets, the proposed policy will allow companies to conduct real world trials of disclosure alternatives,” said Richard Cordray, director of the CFPB. “That will help the Bureau identify what works and does not work to provide consumers with the clear information they need to make financial decisions in a marketplace of evolving programs and products.”
The Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB, authorized the bureau to facilitate innovation and to approve trial disclosure programs. As a part of that commitment, the bureau launched Project Catalyst in November. Project Catalyst is an initiative designed to encourage consumer-friendly innovation in markets for consumer financial products and services.
The bureau is continuing to foster new ideas with today’s proposal. Under the proposed policy, the bureau would approve individual companies for limited time exemptions from current federal disclosure laws in order to allow them to test new disclosures. The companies involved will then share the results of their trial disclosure with the CFPB, which will use that information to improve its disclosure rules and model forms. The public will also have input through the rulemaking process.
When deciding whether or not to grant a company a waiver from current disclosure requirements, the bureau’s proposed policy would evaluate a number of factors, including consumer understanding, cost effectiveness and minimizing consumer risk.