The Consumer Financial Protection Bureau yesterday announced it was replacing its Office of Innovation with a new Office of Competition and Innovation that aims to “spur” innovation in the financial services industry by promoting competition and making it easier for “new market entrants.”
The Office of Innovation was created back in 2018 under former Acting Director Mick Mulvaney. Paul Watkins was hired to run the office and he stayed at the CFPB for two years before leaving for jobs in the private sector. The Office of Innovation was where no-action letters were processed and where companies could create digital sandboxes to test new product offerings. Those initiatives proved to be “ineffective” according to the CFPB, necessitating the creation of the new Office of Competition and Innovation.
“Competition is one of the best forms of motivation. It can help companies innovate and make their products better, and their customers happier,” said CFPB Director Rohit Chopra in a statement. “We will be looking at ways to clear obstacles and pave the path to help people have more options and more easily make choices that are best for their needs.”
The objective for the new Office of Competition and Innovation will be to “create market conditions where consumers have choices, the best products win, and large incumbents cannot stifle competition by exploiting their network effects or market power,” the CFPB said in its announcement.
How this manifests itself is by making sure consumers have the right to switch accounts and providers and making sure that smaller companies do not get “runover” by larger companies who can pitch inferior products to larger customer bases. The CPFB also wants to remove “obstacles” for innovators to launch products such as not having the same amount of data stored by big banks, for example.
