FiSCA Urges CFPB to Focus Activities on Unregulated Operators

Cautions That Overregulation of Compliant Providers and Products May Curtail Access to Critical Financial Services

WASHINGTON, Jan. 19, 2012 /PRNewswire-USNewswire/ -- Ted Saunders, Chief Executive Officer of Community Choice Financial and a board member of Financial Service Centers of America (FiSCA), the leading trade association representing the multi-line financial service center industry, today urged the Consumer Financial Protection Bureau (CFPB) to focus its initial payday lending-related regulatory activities on companies that operate outside existing federal and state regulations. 

Saunders delivered his remarks at a CFPB field hearing in Birmingham, AL convened to discuss the issue of payday loans. He described the federal and state regulations to which the industry complies; underscored the industry's strong support of transparency and consumer protections; and urged the CFPB to focus its attentions on unlicensed operators that evade existing laws.

Saunders released the following statement:

"The payday loan product is already effectively regulated at the state level. In addition, the licensed industry fully supports the goal of ensuring that all financial transactions are transparent and include adequate consumer protections. That is why companies offering payday loans that are members of FiSCA follow industry best practices that include rigorous consumer protection standards.

"Because the overwhelming majority of companies follow industry best practices, have stringent consumer protection standards in place and follow federal and state regulations, overall consumer satisfaction with payday loans is very high.  The vast majority of consumers using our products understand them and use them responsibly. They know that payday loans compare favorably to bank overdrafts, bounced checks, credit card advances and deposit advance programs offered by banks and credit unions.  With this in mind, it is no surprise that these products enjoy such high customer satisfaction levels, and receive very few consumer complaints.

"At the same time, we all recognize that there are companies that fail to abide by any laws, offer loan products at much higher rates of interest and commonly fail to provide any consumer protections. These companies are bad for everyone, consumers and the industry alike. And these companies should be the primary focus of the CFPB as it begins its exploration into how best to regulate nonbank financial services. It is our hope that the CFPB will look to regulate all short-term, small dollar credit products and services consistently across all entities that offer them to consumers.

"We look forward to continuing to work with CFPB staff to ensure they understand the regulatory environment under which small dollar loans are currently offered, the consumer protections already in place and the important role such loans fill to meet the short-term credit needs of millions of Americans."

Saunders' entire submitted remarks can be found by visiting FiSCA's website, www.fisca.org.

About FiSCA

FiSCA, founded in 1987, is the national trade association for more than 6,500 individual financial service centers across the United States. FiSCA members provide a wide variety of financial services and products to their communities, including check cashing, money orders, money transfers, and electronic bill payment services, automatic teller machine access, government benefit and payroll payments, small dollar short-term loans, electronic tax preparation, prepaid debit cards, deposit acceptance services, public transportation fare and token sales, motor vehicle license plate and title distribution, postage stamp sales and numerous other services. For more information, please visit www.fisca.org.

SOURCE Financial Service Centers of America