How recent CFPB guidance changes affect financial institutions
By Bill Elliott, CRCM; director of compliance education, Young & Associates
Since its inception in 2011, the Consumer Financial Protection Bureau (CFPB) has responded to a wide range of issues — even without an act of Congress, such as with the Truth in Lending Act. The agency has relied on compliance bulletins, advisory opinions, interpretive rules and circulars to provide information regarding priorities and interpretations of federal consumer financial laws.
With a new administration in Washington, the CFPB has gone through a long and difficult transition that (as of this writing) is still not complete. Pending lawsuits and uncertainties created by the administration may cause additional changes, so changes in the agency may continue.
The original plan for the agency was to have a measure of independence from the natural changes from administration to administration. Over the last 14 years, mostly through court cases, the agency’s independence has eroded. The actions discussed below are, at least at some level, the direct result of that erosion.
Latest CFPB guidance changes
On May 12, 2025, CFPB Acting Director Russell Vought announced the withdrawal of 67 guidance documents, consisting of:
- Eight policy statements
- Seven interpretive rules
- 13 advisory opinions
- 39 other guidance documents such as circulars and bulletins
The reasoning behind this action was that policies implemented by guidance represent an unfair regulatory burden and might be contrary to federal law.
“In many instances, this guidance has adopted interpretations that are inconsistent with the statutory text and impose compliance burdens on regulated parties outside of the strictures of notice-and-comment rulemaking,” Vought said. “But even where the guidance might advance a permissible interpretation of the relevant statute or regulation, or afforded the public an opportunity to weigh in, it is the Bureau’s current policy to avoid issuing guidance except where necessary and where compliance burdens would be reduced rather than increased.”
Vought further outlined the new policy and the reasons for it:
- The CFPB commits to issuing guidance only when that guidance is necessary and would reduce compliance burdens rather than increase them. “Historically, the Bureau has released guidance without adequate regard for whether it would increase or decrease compliance burdens and costs,” he wrote. “Our policy has changed.”
- The CFPB commits to reducing its enforcement activities in conformance with President Trump’s directive to deregulate and streamline bureaucracy. He noted that many of the CFPB’s enforcement responsibilities overlap or duplicate other state and federal regulatory efforts.
- “Finally, to the extent guidance materials or portions thereof go beyond the relevant statute or regulation, they are unlawful, undermining any reliance interest in retaining that guidance,” he said.
This may not signal the demise of all 67 items. The CFPB stated it intends to continue reviewing these guidance documents. Some may ultimately be reinstated, at least in part. Until that happens, the CFPB and presumably all other banking regulators will not enforce or otherwise rely upon the guidance documents.
A closer look at the CFPB withdrawals
Many of these withdrawn guidance documents received justified criticism. For example, the Bureau withdrew the 2024 circular titled Improper Overdraft Opt-In Practices. This document imposed additional requirements, well beyond what the regulation requires, on institutions’ record-keeping practices. This occurred without going through formal notice-and-comment rulemaking under the Administrative Procedure Act.
Two other notable withdrawals:
The first involves Unfair, Deceptive or Abusive Acts or Practices (UDAAP) concerns with digital platforms involving non-mortgage consumer financial products and services.
Although the CFPB removed this document, it kept an advisory opinion that addresses similar UDAAP concerns and Real Estate Settlement Procedures Act (RESPA) Section 8 issues for digital platforms offering mortgage products.
The second rescission involved the issue of sexual preference under Regulation B. Sexual preference should never be a reason for denying a loan, but some may interpret rescission of that document as removing some protections for that segment of the lending public.
In spite of these removals, the CFPB continues to pursue cases involving consumer reporting, online installment lending, mortgage lending and debt collection.
CFPB priorities
In April 2025, Mark Paoletta, chief legal officer of the CFPB, sent a memorandum to all staff setting forth the priorities of the new leadership.
Key aspects of the priorities include the following:
- A shift back to prioritizing banks over nonbanks and enlisting the states to conduct supervision and enforcement over nonbanks.
- A focus on mortgages (highest priority), consumer reporting, debt collection, fraudulent overcharges and fees.
- A deprioritization of peer-to-peer platforms and lending, consumer data, remittances and digital payments, among other areas.
If you would like to review the entire CFPB document, you can find it here.
Contact Young & Associates today at consultants@younginc.com if we can assist in any way with these or any other regulatory compliance issues.
