Among other things, these  offices research, analyze, and report on consumer financial markets  issues. The Markets Offices and the Office of Research contribute to CFPB’s  efforts to address the Dodd-Frank Act requirement that CFPB monitor for  certain risks to consumers in support of its rulemaking and other  functions. CFPB Monitors Consumer Financial Markets to Inform Policy but Does Not Systematically Prioritize Consumer Risks

		CFPB Routinely Monitors Market Trends and Collects Targeted Information for Rulemaking and Other Purposes

To address the Dodd-Frank Act consumer risk-monitoring requirement,  CFPB routinely monitors consumer financial markets through a variety of  methods. 2). CFPB internal data and research. External data and research. CFPB also gathers market  intelligence from engagement with industry representatives. Coordination with other regulators. Industry supervision and policy positions. Public reports. CFPB officials further noted that other public CFPB reports include  information related to risks to consumers and may also respond to the  annual Dodd-Frank Act reporting requirement. CFPB Lacks a Systematic Bureau-Wide Process for Prioritizing Which Consumer Financial Risks to Address

CFPB currently lacks a systematic, bureau-wide process for prioritizing  financial risks facing consumers—using information from its market  monitoring, among other sources—and for considering how it will use its  tools to address those risks. Federal internal control standards state that management should use  quality information to achieve agency objectives, such as by using quality  information to make informed decisions. In addition, the standards state  that management should identify, analyze, and respond to risks related to  achieving the defined objectives. While CFPB has continued to take steps to consider information to inform  its policy priorities, a systematic, bureau-wide process to prioritize risks to  consumers and consider how CFPB will use its full set of tools to address  them could help to ensure that CFPB effectively focuses its resources on  the most significant risks to consumers. This, in turn, could enhance  CFPB’s capacity to meet its statutory consumer protection objectives. CFPB Has Taken Steps to Meet Statutory Requirements for Retrospectively Assessing Significant Rules

		CFPB Developed Criteria to Identify and Assess Relevant Rules

In two internal memorandums, CFPB documented an initial process for  meeting the Dodd-Frank Act requirement to retrospectively assess  significant rules or orders and issue reports of such assessments within 5  years of the rule or order’s effective date. CFPB Has Made Progress toward Completing Its First Three Assessments

For each of the three rules it determined to be significant, CFPB created  detailed assessment plans and a timeline for completion (see table 1). CFPB published its Remittance Rule Assessment Report in October  2018. Conclusions

In monitoring risks of financial products and services to consumers, CFPB  has drawn from a wide range of sources, and its findings have informed  its key consumer protection tools, such as rulemakings and consumer  education materials. Recommendation for Executive Action

The Director of CFPB should implement a systematic process for  prioritizing risks to consumers and considering how to use the bureau’s  available policy tools—such as rulemaking, supervision, enforcement,  and consumer education—to address these risks. In its written comments, CFPB did not agree or disagree with our  recommendation but stated that it will endeavor to improve its processes  for identifying and addressing consumer financial risks. CFPB stated that  it recognizes the importance of having processes in place to prioritize and  address risks to consumers in the financial marketplace.
Why GAO Did This Study

The Dodd-Frank Act created CFPB to regulate the provision of consumer financial products and services. Congress included a provision in statute for GAO to study financial services regulations annually, including CFPB’s related activities. This eighth annual report examines steps CFPB has taken to (1) identify, monitor, and report on risks to consumers in support of its rulemakings and other functions and (2) retrospectively assess the effectiveness of certain rules within 5 years of their effective dates.
GAO reviewed CFPB policies and procedures, internal and public reports, and memorandums documenting key decisions, assessment plans, and requests for public comment. GAO also interviewed officials from CFPB, three federal agencies with which it coordinated, and representatives of consumer and industry groups.

What GAO Found

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the Consumer Financial Protection Bureau (CFPB) has routinely monitored the consumer financial markets to identify potential risks to consumers related to financial products and services. CFPB monitors consumer complaints, analyzes market data, and gathers market intelligence from external groups (see figure for sources of CFPB’s monitoring). CFPB has used risk-monitoring findings to inform its rulemakings, supervision, and other functions. In 2015, CFPB initiated a bureau-wide process for using market data and other information to set policy priorities related to addressing risks to consumers. However, CFPB has not yet decided whether it will continue to use this process to set priorities. CFPB currently lacks a systematic, bureau-wide process for prioritizing financial risks to consumers and considering how it will use its tools—such as rulemaking, supervision, and consumer education—to address them. Federal internal control standards state that management should use quality information to achieve agency objectives and that it should also identify, analyze, and respond to risks related to achieving those objectives. Implementing a bureau-wide prioritization process could help to ensure that CFPB effectively focuses its resources on the most significant financial risks to consumers and enhances its ability to meet its statutory consumer protection objectives.
CFPB has taken steps to retrospectively assess its significant rules within 5 years of these rules becoming effective, as required by the Dodd-Frank Act. CFPB developed and applied criteria to identify three rules as significant and requiring a retrospective assessment. For these three rules, CFPB created assessment plans, issued public requests for comment and information, and reached out to external parties for additional data and evidence. In October 2018, CFPB issued its first assessment report on a rule related to cross-border money transfers. Among other things, the report found that certain trends, such as increasing volume of these transfers, continued after the rule took effect. CFPB expects to complete the other two assessments by the January 2019 deadline.

What GAO Recommends

GAO recommends that CFPB implement a systematic process for prioritizing risks to consumers and considering how to use its available policy tools—such as rulemaking, supervision, enforcement, and consumer education—to address these risks. CFPB did not agree or disagree with the recommendation but agreed with the importance of having processes in place to prioritize and address consumer financial risks.