Consumer Financial Protection Accountability and Reform Act of 2026
- Sponsor
- Rep. Barr, Andy [R-KY-6]
- Committees
- Oversight and Government Reform Committee (primary)
- Last action
- Sep 16, 2026
Bottom line
The bill significantly curtails the CFPB's independence and enforcement authority while introducing new regulatory frameworks for emerging financial products and services.
What it actually does
This bill enacts comprehensive reforms to the Bureau of Consumer Financial Protection (CFPB), fundamentally altering its governance, enforcement powers, and regulatory processes. It shifts the CFPB to the regular appropriations process, redefines its authority regarding 'abusive' acts, limits its enforcement scope, and introduces new requirements for cost-benefit analysis and interagency coordination. Additionally, it creates a safe harbor for small-dollar credit products, establishes a regulatory framework for earned wage access services, and exempts attorneys engaged in litigation activities from certain federal consumer financial laws.
Proponents argue
Supporters argue that these reforms are necessary to bring accountability and transparency to the CFPB, which they contend has overstepped its authority and imposed undue burdens on financial institutions and small businesses. They believe the bill will foster innovation in consumer financial markets by providing regulatory clarity and reducing compliance costs, ultimately benefiting consumers through increased access to affordable products and services. The changes to the 'abusive' standard and civil penalties are presented as restoring fairness and due process.
Opponents contend
Critics contend that the bill severely weakens the CFPB's ability to protect consumers from predatory practices by stripping it of its independent funding, narrowing its enforcement tools, and creating loopholes for bad actors. They argue that the proposed changes to the 'abusive' standard and limitations on enforcement actions will make it harder for the Bureau to address emerging threats and hold financial institutions accountable, potentially leading to increased consumer harm and a less stable financial system. They also express concern that the bill could preempt stronger state-level consumer protections.
The bill is substantial and highly technical, requiring significant time for an informed reader to fully grasp its implications across multiple titles and amendments to existing law. The estimated reading time is appropriate given its complexity and breadth.
Sec. 101, Title I
Bringing the Bureau into the Regular Appropriations Process
This section amends the Consumer Financial Protection Act of 2010 to remove the CFPB's independent funding mechanism, which currently draws from the Federal Reserve System. Instead, the CFPB would be subject to the annual Congressional appropriations process, requiring it to seek funding directly from Congress each year. This change aligns the CFPB's funding with most other federal agencies.
Supporters argue
Supporters argue that bringing the CFPB under the regular appropriations process enhances democratic accountability, ensuring that an agency with significant regulatory power is directly answerable to elected representatives and the public through the budgeting process.
Critics contend
Critics contend that this change would politicize the CFPB, making its funding vulnerable to political pressures and potentially hindering its ability to act independently to protect consumers, especially when its actions might be unpopular with certain political factions or regulated industries.
Tradeoffs
The provision balances the desire for greater democratic accountability and Congressional oversight against concerns about politicizing a consumer protection agency and potentially undermining its independence and effectiveness.
Sec. 103, Title I
Transparency in Cost-Benefit Analysis for CFPB Rules
This section mandates extensive new requirements for the CFPB's rulemaking process, requiring detailed quantitative and qualitative cost-benefit analyses for all proposed rules. It specifies factors to be assessed, such as compliance costs for small businesses, effects on economic activity, and impacts on access to credit. It also requires identification of objectives, key performance indicators, statutory authority, and alternatives, along with public release of data and assumptions.
Sec. 105, Title I
Modernizing Regulatory Reviews (OMB Review of CFPB Rules)
This section establishes a new process for retrospective review of CFPB rules by the Director of the Office of Management and Budget (OMB). Major rules would be reviewed within 8 years of compliance, and non-major rules within 10 years. The OMB Director would evaluate costs, benefits, achievement of objectives, and market impacts. If a rule fails to demonstrate net benefits, the CFPB would be required to propose amendments or repeal it.
Sec. 106, Title I
Bureau of Consumer Financial Protection-Inspector General Reform
This section establishes an independent Inspector General (IG) for the CFPB, separating it from the Inspector General of the Board of Governors of the Federal Reserve System. The new IG would be appointed by the President and confirmed by the Senate, and would be required to appear before Congress after the CFPB Director's testimony. This aims to provide dedicated oversight for the CFPB.
Sec. 201, Title II
Rectifying Undefined Descriptions of Abusive Acts and Practices
This section significantly redefines and limits the CFPB's authority regarding 'abusive acts or practices.' It requires the CFPB to issue a rule defining 'abusive' within 180 days, prohibits the Bureau from interpreting UDAAP authority to include discriminatory practices, and provides a narrower definition of 'abusive' focusing on intentional interference or unreasonable advantage. It also introduces a 'good-faith effort to comply' defense against monetary relief and a 180-day notice and opportunity to cure period before enforcement actions.
Sec. 204, Title II
Restoring Court Authority Over Litigation (Attorney Exemption)
This section amends Title 28 of the U.S. Code to explicitly state that federal agencies have no supervisory, enforcement, or regulatory authority over the litigation activities of attorneys or law firms. It also amends the Fair Debt Collection Practices Act (FDCPA) to exempt licensed attorneys and law firms from the definition of 'debt collector' to the extent they are engaged in litigation activities to collect a debt on behalf of a client.
Sec. 301, Title III
Safe Harbor for Small-Dollar Credit Products
This section creates a safe harbor under the Truth in Lending Act (TILA) for covered entities (insured depository institutions, credit unions, and their third-party contractors) offering small-dollar credit products (loans or lines of credit up to $3,500, adjusted for inflation). If these entities comply with specific product structure (e.g., repayment terms over 45 days, full amortization, no rollovers) and underwriting requirements, they are exempt from civil money penalties and private rights of action under TILA.
Sec. 304, Title III
Earned Wage Access Services Regulation and Preemption
This section establishes a comprehensive federal regulatory framework for earned wage access (EWA) services, defining them and setting requirements for providers. Key provisions include requiring a no-cost option for consumers, detailed disclosures, consumer attestation, dispute processes, and prohibitions on certain collection practices (e.g., civil suits, debt collectors). Crucially, it preempts state laws that treat compliant EWA services as credit or loans, and clarifies that EWA services are not considered credit under federal law.
Sec. 401, Title IV
Asset Thresholds for Supervision of Banks, Savings Associations, and Credit Unions by the Bureau of Consumer Financial Protection
This section raises the asset threshold for direct CFPB supervision of banks, savings associations, and credit unions from $10 billion to $30 billion. It also mandates periodic adjustments to this threshold every five years based on changes in the current-dollar United States gross domestic product, ensuring the threshold keeps pace with economic growth.
Sec. 402, Title IV
Supervisory Election for Covered Institutions
This section allows insured depository institutions and credit unions with assets above the CFPB's supervisory threshold (now $30 billion) to elect to remain under the supervision of their prudential regulator for consumer financial law, rather than the CFPB. New institutions exceeding the threshold would automatically make this election. The CFPB can petition the prudential regulator to terminate this election if there are heightened risks of substantial injury to consumers and the prudential regulator has failed to address compliance. The CFPB retains backup enforcement authority if the prudential regulator fails to act on a referred violation.
Sec. 403, Title IV
Financial Regulatory Coordination and Accountability
This section mandates enhanced interagency coordination for CFPB rulemaking and enforcement actions. For rulemaking, the CFPB must consult with prudential regulators and state financial regulators, provide proposed rules for written comment (with a 60-day minimum period), and publish detailed responses to substantive comments. For enforcement actions against depositories, the CFPB must provide advance written notice to and seek views from prudential and state regulators, aiming to avoid duplication and conflict.
Sec. 501, Title V
Civil Money Penalties Reform
This section reforms the CFPB's civil money penalty structure by eliminating the lowest (first) tier of penalties and reclassifying the remaining tiers. The previous second tier becomes the new first tier, and the previous third tier (for knowing violations) becomes the new second tier, with its maximum penalty reduced from $1,000,000 to $50,120 per day. It also adds 'self-reporting' as a mitigation factor for penalty assessment and requires the CFPB to issue a rule establishing policies for reducing penalties based on mitigation factors.
Sec. 505, Title V
Collecting and Tracking Complaints Reforms
This section introduces new requirements for the CFPB's consumer complaint system. It mandates that consumers attest under penalty of perjury that their complaint information is true, that they submitted it directly or through an authorized representative, and that they informed the covered person of the issue at least 60 days prior. It also allows covered persons to close duplicative, frivolous, unauthorized, or previously remedied complaints without further action, and requires the CFPB to keep narrative content of complaints and responses confidential, only publishing aggregated data.
Redefines 'abusive' acts or practices to require intentional and material interference with consumer understanding or unreasonable advantage taken of a consumer's lack of understanding and reasonable reliance on the covered person's representation. It also adds a presumption that substantial injury is reasonably avoidable if an act was timely, clearly, and conspicuously disclosed.
Sec. 201(c), Title II
Why it matters:While central to the bill's intent, the detailed redefinition of a key legal term is often placed in technical sections. The specific wording and conditions are critical to its effect but require careful reading to fully appreciate the shift in regulatory burden and proof.
Case for: Proponents argue this provides much-needed clarity and predictability for regulated entities, preventing subjective interpretations of 'abusive' and ensuring that businesses are only penalized for clearly defined harmful conduct, especially when disclosures are clear.
Case against: Opponents argue that this narrow definition significantly limits the CFPB's ability to protect consumers from novel or complex predatory practices, particularly those that exploit behavioral biases or information asymmetries, even if disclosures are technically present but practically ineffective.
Estimated impact: Significantly narrows the scope of the CFPB's 'abusive' authority, potentially reducing enforcement actions and increasing the burden of proof for the Bureau.
Amends Title 28 of the U.S. Code to insert a new Section 1632, titled 'Preservation of State and Federal courts' primary and inherent authority to regulate and oversee attorneys engaged in litigation activities,' which explicitly states that a federal agency has no supervisory, enforcement, or regulatory authority over litigation activities of attorneys or law firms.
Sec. 204(a), Title II
Why it matters:This provision addresses a jurisdictional dispute between federal agencies (like the CFPB) and the judiciary/state bar associations over the regulation of attorneys. Placing it in Title 28 rather than directly within the Consumer Financial Protection Act could be seen as a tactical choice to broaden its scope and potentially reduce scrutiny from committees primarily focused on financial services.
Case for: Proponents argue this clarifies that attorneys are regulated by courts and state bar associations, preventing federal agencies from overreaching into the traditional domain of judicial oversight of legal practice.
Case against: Opponents argue this creates a significant loophole, allowing attorneys to engage in potentially harmful litigation practices (e.g., in debt collection) without federal agency oversight, potentially leaving consumers vulnerable to practices that state bar associations may not adequately address.
Estimated impact: Significantly limits the regulatory reach of federal agencies, including the CFPB, over the litigation activities of attorneys and law firms, potentially impacting consumer protection in areas like debt collection.
Preempts state or local laws that treat earned wage access (EWA) services (when compliant with this Act) as credit, a loan, debt, or a substantially similar product, or that prevent or significantly interfere with the offering of such services.
Sec. 304(b)(2), Title III
Why it matters:Preemption clauses are often placed within the 'miscellaneous' or 'relation to other laws' sections. For EWA, where states have begun to develop varied regulatory approaches, a federal preemption is a significant policy choice that might be less visible than the direct operational rules.
Case for: Proponents argue that a uniform federal standard is essential for the EWA industry to scale and innovate, preventing a confusing and costly patchwork of 50 different state regulations that could stifle growth and access to these services.
Case against: Opponents argue that this preemption clause undermines state sovereignty and prevents states from enacting stronger consumer protections tailored to their local markets, potentially leaving consumers vulnerable if the federal standard is deemed insufficient.
Estimated impact: Establishes a federal floor for EWA regulation and prevents states from classifying compliant EWA services as traditional loans, significantly altering the regulatory landscape for this industry.
Amends the Consumer Financial Protection Act of 2010 to prohibit the CFPB from using information obtained through its market monitoring functions (under section 1022(c)(4)(C)) to initiate or in connection with any enforcement investigation or supervisory examination. It also mandates that such information not be made public by the Bureau.
Sec. 502, Title V
Why it matters:Limitations on data use are often found in technical amendments. This provision specifically targets a perceived overreach by the CFPB in using market research for enforcement, a point of contention for regulated entities. Its placement ensures it is legally binding but not immediately obvious to a casual reader.
Case for: Proponents argue this prevents the CFPB from using market monitoring as a pretext for 'fishing expeditions' or 'regulation by enforcement,' ensuring that market research is used for policy development rather than punitive actions, and protecting proprietary business information.
Case against: Opponents contend that this restriction severely hampers the CFPB's ability to identify and respond to emerging threats and systemic risks in the market. They argue that market intelligence is crucial for effective enforcement and supervision, and preventing its use creates a blind spot for the Bureau.
Estimated impact: Significantly restricts the CFPB's ability to leverage its market monitoring data for enforcement and supervision, potentially reducing the number of enforcement actions initiated based on broad market trends.