The CFPB has opened a new Office of Competition and Innovation. The move comes "as part of a new approach to help spur innovation in financial services by promoting competition and identifying stumbling blocks for new market entrants," according to a press release issued on May 24, 2022.
The "new office will support a broader initiative by the CFPB to analyze obstacles to open markets, better understand how big players are squeezing out smaller players, host incubation events, and, in general, make it easier for people to switch financial providers," according to the CFPB.
The Office of Competition and Innovation "will focus on how to create market conditions where consumers have choices, the best products win, and large incumbents cannot stifle competition by exploiting their network effects or market power."
The new office will support the CFPB's general effort to increase competition for the benefit of all consumers. Specifically, the CFPB will:
- Give consumers their walking rights to switch providers.
- Research structural problems blocking successes.
- Understand how bigger players can gain advantage over smaller players.
- Identify ways to address commonplace obstacles. A future rulemaking by the CFPB under Section 1033 of the Consumer Financial Protection Act that has been long in the works will give consumers access to their own data.
- Host events to explore barriers to entry and other obstacles.
The office will replace the Office of Innovation, which focused on an application-based process to confer special regulatory treatment on individual companies, and which opened in 2018, and Project Catalyst, which launched in 2014. The prior effort was best known for its role in processing applications for No Action Letters and Sandboxes that applied to an individual company's specific product offering.
"After a review of these programs, the agency concludes that the initiatives proved to be ineffective and that some firms participating in these programs made public statements indicating that the Bureau had conferred benefits upon them that the Bureau expressly did not," said CFPB in the press release.