Election season is over, and for the first time in eight years we will have a new administration in the White House. So what’s in store for the financial services space? This presentation reveals insights from experts in Washington on what to expect from regulators over the next year.

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Inside the Beltway Webinar | November 17, 2016
Post-Election 2016:
What’s on the horizon for the
financial services industry?

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• CFPB Update
• Financial Regulatory Reform?
• Access to Credit Agenda
• OML Regulatory Horizon
• State Update
• Q&A session
Today’s Discussion Agenda

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Speakers
Government Affairs and Public Policy
Liz Oesterle
Senior Director
Murray Johnston
Director
Jeremy Hancock
Director
Zack Smith
Manager
Tony Hadley
Senior Vice President

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Consumer Financial Protection Bureau
Rulemakings impacting consumer credit ecosystem
Payday, vehicle title
and high cost
Installment loans
Public comments
under review
Debt collection
Proposed rule in
early 2017
Credit Reporting
Data accuracy;
dispute resolution

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Data Accuracy and Consumer Disputes
Credit Reporting
Agency
Data
Furnisher
Data User

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What’s driving the focus on data accuracy?
2013 FTC longitudinal study
2.2%
of credit files contained a material error that
would move a consumer to a different score
band reflecting a higher risk
5.2%
of consumers are affected by a material
error, reflecting that consumers have three
reports and not all reports contain an error
21% of credit reports contained an error that did
not materially affect their score
26% of credit reports were alleged to contain
an inaccuracy

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Data Accuracy and Consumer Disputes
Credit reporting complaints:
 Incorrect information
on a report (79%)
 Consumer reporting
agency investigation (8%)
 Inability to obtain report
and score (6%)
 Problems with credit
monitoring or identity
protection services (4%)
 Improper use of credit
report (3%) 35%
Mortgages
Credit cards 8%
19%
Debt collectors
Bank
account
Credit
reporting
Other
31%
8%
20%
14%
Complaints handled in 2015

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Bank 1:
50M
Experian:
220M
CFPB May 2016 Report
December 2015 – February 2016 Average Monthly Complaints
1014
911
765 754 736
685
541
322 316 283
Equifax Experian TransUnion Bank 1 Bank 2 Bank 3 Bank 4 Credit Card Co. Servicer Mortgage Co.

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Debt Collection Practices
Report the name of the original creditor
and creditor classification code
(June 2016)
Collectors cannot report debt that did not
arise from a contract or agreement to pay
(June 2016)
Collectors cannot report medical
collection accounts less than 180 days old
(September 2017)
Multi-state Agreement
Assuring maximum possible accuracy

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Multi-state Agreement
Assuring maximum possible accuracy
All Data Furnishers
• Retirement of Metro 1 (September 2017)
• Minimum reporting requirements for consumer
identifying information (September 2017)
• In routine collection and reporting of consumer credit information
• Full month/date/year of birth for authorized users

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CRA Duties
• Streamlined application form and enhanced consumer education
materials on AnnualCreditReport.com
• Enhanced escalation of dispute involving mixed files and
identity fraud
• Improved communications to consumers following a
consumer dispute
Multi-state Agreement
Improving the customer experience

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Financial Regulatory Reform
Congressional Committees have passed legislation that will serve as a
marker for consideration by the next Congress and Administration
• The Senate Banking Committee passed The Financial Regulatory Improvement Act in
May 2015.
• In September 2016, the House Financial Services Committee passed the
Financial Choice Act.
• Both measures, passed on party-line votes, include reforms to Dodd-Frank and would
make changes to the CFPB’s governance and funding structures.
What reform provisions will Senate Democrats support?
• Community bank and credit union relief
• Roll back of auto finance guidance
In the background of this debate: PHH v. CFPB
• The unconstitutionality of the CFPB’s single-director structure;

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H.R. 347 – Facilitating Access to Credit Act of 2015
Would free CFPB-supervised credit bureaus to introduce next-gen
consumer education products into the marketplace by removing
barriers required by the Credit Repair Organizations Act
H.R. 4172 and S. 2355 – Credit Access and Inclusion Act of 2015
Would remove regulatory barriers that prevent furnishing consumer
payment histories to credit bureaus for telecommunication, utilities
and rental bills
H.R. 4211 -- The Credit Score Competition and Equal Access Act
Would require Fannie Mae and Freddie Mac to establishing a
transparent and open process for the validation and approval of credit
score models
Congressional Access to Credit Agenda

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Congressional Access to Credit Agenda
Alternative Data
A May 2015 report from the CFPB estimates that there are roughly
45 million “credit invisibles” in the U.S.
Alternative data is payment information for:
• Rent
• Telecommunications
(phone, cable and wireless)
• Utilities
(electric, gas, water)
Telecoms / Utilities report derogatory but not on-time payments, or the full file
Credit invisibles are consumers with no or “thin” credit files that cannot
be scored

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Congressional Access to Credit Agenda
Credit score competition
Fannie Mae and Freddie Mac underwriting
guidelines require use of a specific branded
credit score
• Pre-recession credit behavior
• Older software
Score competition would allow lenders to
chose among alternative score models to:
• Improve risk prediction with newer
scoring technology/more granularity
• Score more consumers

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Congressional Access to Credit Agenda
Credit Building and Recovery through CROA Reform
Personalized Credit Education
Consumers are directed to Experian by the
disclosures on reports and scores, but
CROA’s misapplication stands in the way of
further education when the consumer asks:
“How can I improve my score?”
What is the Credit Repair Organizations
Act (CROA)?
• Enacted in 1996 to protect consumers
from “credit repair” scams
• “Credit Repair”: Fraudulently
representing to consumers that an
entity can remove accurate, but
negative data from a consumer’s file.
Often for an exorbitant fee.
• 3 business day waiting period
• Onerous/scary consumer disclosure
• Complete disgorgement of funds
as remedy
?

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• Growth and lending models have caught the attention of regulators
• Continued inquiries by Treasury, CFPB, FDIC, FTC, States
and Congress
• OML/FinTech as part of Congressional Innovation Agenda
• Madden fix
• Automate IRS Income Verification Data
• Regulatory Sandbox
OML Regulatory Horizon
More regulations to come?

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State Update
what to expect in 2017
There is growing concern that laws will not keep pace with the increasing
use of consumer information.
• Tightening of data security standards
• Shifting expectation of sensitive information
There is a blurring of the distinction between
identifiable information and anonymous or
de-identified information

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Questions?

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