Picture this: a marketplace in which banks and other financial companies operate with responsible business practices and consumers are educated and well enough informed to make appropriate decisions about financial products and services.
That's the vision Richard Cordray, director of the federal Consumer Financial Protection Bureau, shared with banking industry executives at a convention earlier this month in New Orleans.
"The vision we have before us, and that we are working toward every day, is a market where consumer protections and business opportunities work in tandem," Cordray said in his prepared remarks. "We believe that such a marketplace is the right outcome for all involved and will lead to more stable and sustainable financial conditions that strengthen the future of this country."
Banks and other financial companies have begun to make changes due to CFPB oversight, Cordray said. For instance, he said nonbank financial institutions now have to put greater emphasis on compliance and treating customers fairly.
He also said financial companies are stepping up their customer service to minimize the number of complaints that consumers enter into CFPB's database. And, he added, more firms are analyzing those complaints and building solutions into their compliance management systems.
These efforts are sensible and beneficial and will help financial companies earn greater loyalty from their customers and reduce their exposure to litigation, damage to their reputation and regulatory enforcement, Cordray said.
"Our joint efforts are bringing new levels of accountability to the consumer financial marketplace," he said.
Still, he added, consumers also must take responsibility, and banks can help them by educating students about good saving and credit habits.
"We have made an enormous mistake in this country by not placing a consistent and sustained emphasis on financial education," Cordray said. "Every year, we send thousands of young people out into the world to survive on their own with little or no training in the kinds of decisions they must make to succeed financially. That is a self-defeating approach in any free society ordered around a free market economy, and we simply have to face up to our current failures and insist on doing better."
Are your kids prepared to make financial decisions? How did you prepare them?
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