WASHINGTON — A federal regulator plans to explain what it considers to be “abusive” practices by companies selling financial services, a move aimed at giving a clearer idea of what behavior would get companies into trouble under relatively new government enforcement powers.
Mick Mulvaney, the Consumer Financial Protection Bureau’s acting director, said Monday the bureau is working on a regulation defining how it views unfair, deceptive or abusive acts or practices, known as Udaap. Most of the CFPB’s enforcement actions involve such claims and the 2010 Dodd-Frank financial law, which created the CFPB and gave it broad enforcement powers.
Companies have long complained that the CFPB’s Udaap approach was overly broad and nuanced, making what would trigger an enforcement action less predictable.
Mulvaney, speaking to a conference of mortgage bankers in Washington, said that actions that constitute “unfair” and “deceptive” are well established. “But to my knowledge, I don’t think ‘abusive’ is nearly as well established in the law.” He said the regulation would aim to remove uncertainty about what term means. “We need some examples of things that are abusive but not unfair or deceptive.”
An expanded version of this report appears on WSJ.com.
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