On October 14, the CFPB announced a new initiative to investigate potential unlawful debanking practices by the nation’s largest banks. The announcement follows the OCC’s release of a report examining whether financial institutions restricted access to banking services based on customer’s political or religious beliefs or otherwise lawful business activities. The initiative is part of the CFPB's efforts to implement Executive Order 14331, Guaranteeing Fair Banking for All Americans (previously discussed here). The OCC's report, which examined debanking practices at nine large national banks, identified policies that the agency concluded restricted access to financial services based on reputational considerations rather than objective financial risks.
Following those findings, the CFPB announced that it would investigate whether the institutions identified in the report and others complied with federal consumer financial laws and take appropriate action where warranted.
Specifically, the CFPB identified several areas of focus:
- Consumer Protection Compliance. The CFPB will evaluate potential violations of the Equal Credit Opportunity Act (ECOA), Fair Credit Reporting Act (FCRA), and prohibitions against unfair, deceptive, or abusive acts or practices (UDAAP), including applicable adverse action notice requirements.
- Investigations and Supervisory Reviews. The CFPB has been reviewing consumer complaints, supervisory information, and enforcement data for evidence of potential unlawful debanking and pursuing investigations based on that information.
The CFPB also recently updated its website and consumer complaint portal to provide additional information about debanking and encourage affected consumers to submit complaints.
Putting It Into Practice: These initiatives by federal regulators signal additional federal scrutiny of financial institutions’ account access and termination practices. The CFPB's involvement introduces potential consumer protection enforcement considerations beyond the prudential supervision issues previously addressed by banking regulators. Financial institutions should review the appropriate policies and procedures to ensure account decisions are supported by objective, documented risk considerations.