The Chief Legal Officer of the Consumer Financial Protection Bureau yesterday published a memo detailing a major shift in the Bureau’s enforcement and supervision priorities for 2025. According to the memo sent to staff, the bureau will significantly cut the number of its supervisory exams and refocus its efforts on addressing tangible harms to consumers, particularly those affecting service members, veterans, and their families.
The memo was first published on X by a reporter for the Wall Street Journal.
The key changes, outlined in the memo from CFPB Chief Legal Officer Mark Paoletta, include:
- Focus on Tangible Consumer Harm: The CFPB plans to prioritize efforts to return money directly to consumers rather than imposing penalties on companies simply to fill the Bureau’s penalty fund. This shift emphasizes practical solutions and tangible harm mitigation, as opposed to broader supervisory actions.
- Deprioritizing Nonbank Supervision: In a reversal of prior priorities, the CFPB will now focus more on regulating the largest banks, moving away from its previous focus on nonbank financial institutions like mortgage originators and payment services.
- Reduced Supervision of Certain Areas: The CFPB will reduce its oversight of sectors such as student loans, medical debt, digital payments, and consumer data, areas that had previously been a key focus for the Bureau under prior administrations. This decision comes at a time when millions of student-loan borrowers are expected to default due to the expiration of protections, but the CFPB will no longer prioritize this sector.
- Streamlined Enforcement: The Bureau intends to halve its supervisory “events” and eliminate duplicative enforcement where state regulators are already involved. The memo stresses that the CFPB will respect federalism and minimize overlap with state-level supervision.
- Focusing on Fraud and Consumer Protection: The CFPB will target financial fraud with measurable consumer damage, particularly instances where consumers have been victims of intentional harm. Specific areas of focus will include fraud within mortgage markets and violations related to the Fair Credit Reporting Act (FCRA) and the Fair Debt Collection Practices Act (FDCPA).
- Deprioritizing participation in multi-state exams unless required by statute as a respect to federalism.
This reshaping of the CFPB’s operations marks a significant change in how the Bureau plans to engage with industries under its jurisdiction, and it could have broad implications for collection agencies, banks, credit unions, fintechs, and other financial institutions. The Bureau’s new emphasis on tangible consumer harm, while deprioritizing areas such as medical debt and digital payments, signals a shift in enforcement priorities that may influence the regulatory landscape for many companies in the credit and collection industry.
