Banks have an obligation to deal with their customers in “simple and clear” terms so they can gauge risk and compare products, said U.S. Consumer Financial Protection Bureau director Richard Cordray.
“We strongly believe that financial institutions can and should speak to their customers in terms that are simple and clear,” Cordray told a meeting of the Consumer Bankers Association in Austin, Texas. “This kind of straightforward transparency promotes more informed and more responsible decision-making by consumers across a number of financial markets.”
Cordray, a former Ohio attorney general who became director in January, said the agency’s research has concluded that consumers need better information about the financial risks they face.
“They need to be able to make comparisons so they can shop around for a good deal,” Cordray said.
The bureau was created by the 2010 Dodd-Frank Act in an effort to help protect consumers from the kind of opaque and risky mortgages and other financial products that contributed to the 2008 financial crisis. The bureau is required to propose a simplified mortgage form by July 21, and has earlier proposed simplified documents for credit cards and student loans.
In a question-and-answer session after the speech, Richard Hunt, president of the bankers association, said some companies have already looked at adopting their own simplified disclosures on checking accounts.
“We do not want to constrain or hold you back from doing that in any way,” Cordray said in response.