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» VISIT US ONLINE @ DSNEWS.COM 69 "informs every aspect of the Bureau's work, including research, rule writing, supervision, and enforcement." Formation of regulatory policy based on the complaints of those who are impacted, without meaningful verification or interpretation as to the causes of the complaints, is a profound change in the way that regulation is formed. Under Dodd-Frank § 1013, the Bureau is required to receive complaints from consumers, specifically by establishing a unit - the Office of Consumer Response - "whose functions shall include establishing a single, toll-free telephone number, a website, and a database or utilizing an existing database to facilitate the centralized collection of, monitoring of, and response to consumer complaints regarding consumer financial products or services." To facilitate the submission of complaints, the CFPB launched its Consumer Complaint Database on June 19, 2012. It was initially populated with credit card complaint data, but has since been expanded to include other products, including mortgages, bank accounts, student loans, vehicle and other consumer loans, credit reporting, money transfers, debt collection, payday loans, and prepaid cards. As of March 1, 2005, the Bureau has handled nearly 560,000 complaints, with mortgages and debt collection being the most frequently covered areas. On March 19, 2015, the Bureau announced that it was finalizing rules to allow consumers to add narratives about their complaints. e addition of the consumer narratives will increase the significance and impact of these complaints. According to the Bureau, "consumer narratives provide a first-hand account of the consumer's experience, and adding the option to share them will greatly enhance the utility of the database. e narratives will provide context to complaints, spotlight specific trends, and help consumers make informed decisions. e narratives may encourage companies to improve the overall quality of their products and services, and more vigorously compete over good customer service." (Emphasis added) In this respect, the CFPB's function of collecting consumer complaints to inform its regulatory priorities, as required by Dodd- Frank, has morphed into a mechanism to police the quality of companies' products and customer service, extending the Bureau's regulatory oversight into the private relationship between a company and its customers. is extension is particularly intrusive—and unnecessary, considering we live in an age of social media which allows real-time feedback by consumers through a multitude of channels. Data Collection Another new regulatory tool at the CFPB's disposal is the requirement that it collect information on the financial markets in order to determine its regulatory priorities. Under Dodd-Frank § 1022, the CFPB is directed to "monitor for risks to consumers in the offering or provision of consumer financial products or services, including developments in markets for such products or services." e CFPB performs this monitoring by gathering and compiling information from "variety of sources, including examination reports concerning [companies], consumer complaints, voluntary surveys and voluntary interviews of consumers, surveys and interviews with [companies], and review of available databases." In addition, the CFPB can gather information by requiring companies to provide other information as necessary for it to "fulfill the monitoring, assessment, and reporting responsibilities imposed by Congress." is section of the law was enacted because prior to the financial crisis, Congress felt there was a lack of data on consumer financial products and services that hindered federal oversight and regulation. e CFPB's data collection regime has been the target of extensive criticism, especially from privacy advocates. In September 2014, the Government Accountability Office (GAO) published a report in which it reviewed the CFPB data collection program. According to the GAO report, the CFPB has conducted large-scale data collections including one where it obtained 173 million mortgage loans from a data aggregator. While the GAO found that other federal regulators (e.g., the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency), collect similarly large amounts of data, it did determine that the CFPB "lacks written procedures and comprehensive documentation for a number of processes, including data intake and information security risk assessments. e lack of written procedures could result in inconsistent application of the established practices," including "assessing and managing privacy risks," "monitoring and auditing privacy controls," and "documenting results of information security risk-assessments consistently and comprehensively." e GAO's finding is ironic, given the CFPB's continued emphasis on the importance of companies having written policies and procedures in the context of effective compliance programs. Beyond the obvious privacy and data security risks, the CFPB's collection of large amounts of consumer data will fundamentally change the way regulators act. To reiterate, this was part of Dodd-Frank's goal and is not an unintended consequence; its impact, however, will be dramatic as regulators utilize "big data" to more easily spot trends and trouble spots earlier—all of which will lead to increased regulation. CONCLUSION Although viewed by many as an overreaching agency run amuck, the CFPB is largely following the rules as established by Dodd-Frank. As a result, barring a major change in the law, the Bureau will continue to expand its reach, with a corresponding increase in the regulation of the financial services sector. e calls for regulatory reform and amendments to Dodd-Frank do not currently have the necessary political support. Until they do, this expanding regulatory environment will continue unabated. WALZ Chief Compliance Officer, Maria Moskver, also contributed to this article. "Another new regulatory tool at the CFPB's disposal is the requirement that it collect information on the financial markets in order to determine its regulatory priorities." COVER STORY INDUSTRY INSIGHT INDUSTRY INSIGHT M ARKET PUL SE

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