On Oct. 29, U.S. Representatives Andy Barr (R-KY-06) and Vicente Gonzalez (D-TX-34) announced the introduction of the Civil Investigative Demand Reform Act of 2024, a bipartisan initiative aimed at reforming the Consumer Financial Protection Bureau’s (CFPB) process for issuing civil investigative demands (CIDs) to financial services providers. This legislation seeks to ensure that industry participants are afforded due process while maintaining oversight and consumer protections.
According to a press release, the CFPB has faced criticism for issuing broad CIDs that some have characterized as “fishing expeditions,” lacking specific evidence of wrongdoing. The proposed legislation would mandate that the CFPB explicitly reference any alleged violations in its demands. Furthermore, it would empower companies to voice concerns regarding the vagueness or undue burden of these CIDs. Upon receiving such concerns, the CFPB would be required to narrow or justify the demand within 20 days.
In a significant shift, the legislation would also allow financial firms to bring CIDs before federal court if the CFPB denies a reasonable petition to modify or set aside a demand. Additionally, it would impose a six-year statute of limitations on CIDs, providing further clarity and relief for the financial sector.
“Recent activity shows that the CFPB has abused its ability to examine consumer financial services providers through CIDs by producing vague statements of purpose without specifying alleged wrongful conduct; ultimately limiting procedural relief available to respondents,” said Barr, according to the press release. “The financial services industry needs to comply with the CFPB’s CIDs, but they also have the right to know what the CFPB is asking for and what it is pursuant to a stated violation. The Civil Investigative Demand Reform Act of 2024 will give industry the regulatory clarity they deserve.”
“Small financial institutions are vital to our local economies as they provide greater loan access and financial stability to many,” said Gonzalez, according to the press release. “I’m proud to join Congressman Barr and introduce the Civil Investigative Demand Reform Act of 2024. This bipartisan legislation will ensure that our financial institutions can provide important services to our communities by reducing burdensome bureaucratic barriers while still prioritizing consumer safety.”