The acting director of the Consumer Financial Protection Bureau has announced a plan for the Bureau to undertake a comprehensive internal review of its regulatory guidance documents, such as the medical debt collection guidance it announced in a court filing last week that it was planning to revoke. In a memo that was circulated last Friday, Russell Vought, the CFPB’s acting director, announced the agency would stop issuing sub-regulatory guidance documents and would rescind prior guidance deemed unlawful. This move aligns with the Trump administration’s ongoing push to curb what it calls “weaponized” regulatory practices and to ensure that all regulations go through the proper rulemaking process under the Administrative Procedure Act.
Vought’s memo asserts that the CFPB has historically used guidance to impose regulations without public notice or comment, depriving affected parties of fair notice. The CFPB will now focus on rescinding existing guidance that has unlawfully regulated private entities and will stop the use of mandatory language unless it reflects statutory obligations. This internal review process, set to last 14 days, will scrutinize more than 100 guidance documents, interpretive rules, and advisory opinions issued under previous administrations. The goal is to ensure compliance with APA standards and to limit the Bureau’s regulatory reach.
The CFPB has been accused in the past of “regulation by enforcement” and “regulation by guidance” where its enforcement actions and guidance were expected to be treated as de facto rules that companies in the financial services industry were expected to follow.
This development follows significant concerns from financial institutions and industry groups about the CFPB’s past reliance on guidance documents that bypassed the formal rulemaking process. The CFPB’s issuance of guidance without adequate stakeholder input led to confusion and regulatory uncertainty, particularly for lenders and credit reporting agencies. Industry stakeholders, including Republicans on the House Financial Services Committee, have long argued that these practices stifled innovation and resulted in regulatory burdens that ultimately harmed consumers and businesses alike.
Some of the CFPB’s recent regulations under scrutiny include warnings about medical debt collection, the imposition of ability-to-repay rules on Property Assessed Clean Energy (PACE) financing, and new regulations governing overdraft services. These rules have faced criticism for their potential to harm financial institutions, reduce access to credit, and increase costs for consumers.
