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Which One of Us Is the Service Provider? The Dodd-Frank Act's Infinite Loop of Oversight

LexisNexis Emerging Issues Analysis

Prudential regulators have advised supervised banks for nearly 30 years about the need for careful diligence of their service providers, but the expectations of the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) raise both the intensity of these warnings, and the stakes. Title X of the Dodd-Frank Wall Street Reform Act (“DFA”) places under the supervisory authority of the CFPB any “covered person” involved in the provision of any consumer financial product or service. The CFPB Examination Manual views these business-to-business relationships through the lens of consumer experience rather than safety and soundness. Now, more than ever, CFPB-supervised institutions stand in the shoes of their service providers for purposes of evaluating regulatory, litigation, or compliance risk.

Originally published in LexisNexis Emerging Issues Analysis. Reposted with permission.