The Consumer Financial Protection Bureau is now holding financial institutions accountable for any service providers with which they work. The bureau announced the clarification last week in a bulletin, stating that consumers are at a disadvantage in not being able to choose the service providers with which their financial institutions work.
“Consumers are at a real disadvantage because they do not get to choose the service providers they deal with—the financial institution does,” said CFPB Director Richard Cordray. “Consumers must not be hurt by unfair, deceptive, or abusive practices of service providers. Banks and nonbanks must manage these relationships carefully and can be held accountable if they break the law.”
Banks and non-banks working with vendors that provide services such as quality control, customer service or any other products and services to the customer are subject to accountability through the contracting institution.
“Using outside vendors can pose additional risks,” the CFPB stated. “A service provider that is unfamiliar with consumer financial protection laws or has weak internal controls can harm consumers. The CFPB wants to ensure that consumers are protected from irresponsible service providers and that banks and nonbanks are contracting with honest third parties.”
View the bulletin outlining details.
Written by Elizabeth Ecker
