The soon-to-be-created Consumer Financial Protection Bureau has at least some Wall Street insiders worried. No, not the bank bigwigs or hedge fund managers. The latest hand-wringing comes from the advertising community, which worries that the new agency may create “overly cumbersome, cost-prohibitive and possibly even onerous requirements” for financial ads.
The new agency will have broad powers to regulate the financial services industry, and that includes requiring more disclosure of the terms consumers agree to when signing up for products and services. And, according to AdAge, this could extend to the way these services are marketed:
But the new bureau also has the power to make rules on consumer issues not covered by these laws, such as requiring more detailed information in ads or restricting the types of rates charged on payday loans, and observers say it could be some time before the extent of the bureau’s reach would be known.
One thing is certain: Regulators will have to grapple with defining what exactly constitutes an “abusive” practice, a term introduced in the new law that expands the current ban of false, deceptive and unfair advertising practices, [Dan Jaffe, exec VP-government relations for the Association of National Advertisers], said.
“‘Abusive’ means something over and above what has been unfair and deceptive in the past,” Mr. Jaffe said. “It’s a much more elusive concept, and it’s going to have to be parsed out by the regulatory agencies — and also by the courts.”
For now, big financial firms are doing their best to adopt a what-me-worry attitude. Dan Marks of First Tennessee Bank told AdAge that his company keeps its customers because it offers “easy-to-understand products and transparent customer service.” Marks is, of course, the bank’s Chief Marketing Officer, if you didn’t already figure that out.
Advertising: Financial Firms Could See More Ad Curbs [Advertising Age - News]