House committee advances financial system inclusion legislation

Legislation designed to promote greater inclusion in the nation’s financial system has been advanced out of the Financial Services Committee for full House of Representatives consideration.

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Reps. David Scott (D-GA) and Sean Duffy (R-WI) introduced the Financial Inclusion in Banking Act earlier this year to empower the Consumer Financial Protection Bureau’s (CFPB) Office of Community Affairs lead coordination within the Bureau.

“When families and consumers are excluded from traditional avenues for accessing financial services, the impacts are far-reaching,” Scott said. “Low-income consumers frequently pay more in fees and penalties, even for simple services like cashing a check. This simply is not workable. This bipartisan bill shines a light on the importance of financial inclusion, and I look forward to working with my colleagues in the House of Representatives to ensure that all Americans have access to safe and affordable banking services.”

Un-banked, as defined by the Federal Deposit Insurance Corporation (FDIC), means an individual does not have a checking or savings account, officials said, while under-banked is categorized as an individual with both a traditional banking account, like a checking account, but has also relied on alternative financial services within the past 12 months, such as payday loans, pawn shop loans, and auto title loans, among others.

The measure would require the CFPB’s Office of Community Affairs to lead coordination with internal CFPB departments, as well as other agencies in, among others, conducting research identifying hurdles under- and un-banked consumers face when maintaining a sustainable relationship with depository institutions; identifying best practices to increase participation of under- and un-banked consumers in the traditional banking sector; and developing strategies to improve financial education for underserved consumers.