Bill to enhance consumers access to credit examined at hearing

Edward Royce
At a hearing held by the Financial Institutions and Consumer Credit Subcommittee, witnesses discussed a proposal by Rep. Ed Royce (R-CA) to protect and bolster consumer access to credit.

Royce’s bill, the Facilitating Access to Credit Act, would amend the Credit Repair Organizations Act (CROA) to create a process under which an Authorized Credit Services Provider (ACSP) can be exempted from the application of certain requirements under CROA only to the extent it offers, sells, provides, or performs services related to credit and identity protection, and credit education.

“CROA is a law that protects consumers from the predatory practices of credit repair organizations,” Royce said. “It does this by requiring written contracts, statutory disclosures, a cooling-off periods, a prohibition on prepayment under what we’re doing here with the Credit Service Protection Act, what we propose is leaving CROA in place for credit repair while changing the regulatory regime, for what? For credit education. That’s the point. We’ve tried to strike the right balance. On one hand offering a clear path to better financial literacy for consumers, while maintain the strong consumer protection by the FTC, by the CFPB, and by the state Attorneys General. So, how would consumers continue to be protected under this provision? Can the bad actors that offer predatory forms of credit repair simply use this law to escape CROA liability?”

He asked Thomas Quaadman, executive vice president, Center for Capital Markets Competitiveness, U.S. Chamber of Commerce, what access to credit education means for consumers.

“You know Mr. Royce I think you’re exactly along the right lines that consumers are much more savvy and understand they need to stay on top of their credit scores and be much more aware of what is impacting their financial situation. To the extent that we can help educate consumers to be better informed and to better use tools to protect their credit scores they’re going to be not only better consumers they’ll be better entrants into the financial system,” Quaadman said.

Several organizations wrote in support of the bill, including the Coalition to Improve Credit Education, the National Black Caucus of State Legislators, the National Bankers Association, the Policy and Economic Research Council, the U.S. Chamber of Commerce, and the U.S Hispanic Chamber of Commerce.