CFPB Faces Challenges In The New Year

The genuine legal, political, and operational pressures on the Consumer Financial Protection Bureau (CFPB) going into 2026 look to be turbulent.

Key challenges ahead

• Legal and constitutional scrutiny: The CFPB continues to face litigation over the scope of its authority, its funding structure, and the validity of past rules and enforcement actions, creating uncertainty for both the agency and regulated entities.

• Political pressure and oversight: A divided and highly polarized Congress is intensifying oversight, with some lawmakers seeking to limit CFPB authority, scrutinize rulemakings, and expand opportunities for financial firms to challenge agency actions.

• Rulemaking bandwidth: The Bureau has a heavy agenda, including implementing and updating rules on mortgage lending, small‑business lending data, open banking/consumer data access, and “junk fees,” stretching staff and legal resources.

Industry and market headwinds

• Fintech and payments innovation: Rapid growth in digital wallets, BNPL (buy now, pay later), and embedded finance makes it harder to apply and enforce existing consumer‑protection rules designed for traditional banks and credit products.

• Data, AI, and algorithms: Increased use of AI in underwriting, collections, fraud detection, and marketing raises fair‑lending, discrimination, and transparency risks that the CFPB is under pressure to monitor and address, often with outdated statutory tools.

• Cybersecurity and data protection: Rising frequency and impact of data breaches in financial services place pressure on the CFPB to coordinate with other regulators and to ensure firms give clear disclosures and remediation when consumers are harmed.

Enforcement and supervision constraints

• Litigation risk from targets: Financial institutions are more frequently challenging CFPB enforcement theories, civil penalty calculations, and interpretations of “unfair,” “deceptive,” and “abusive” practices, which can slow or narrow enforcement.

• Resource limitations: The scope of the consumer‑finance market—banks, nonbanks, fintechs, servicers, and debt collectors—far exceeds the Bureau’s exam and enforcement capacity, forcing it to prioritize certain markets and practices while others see limited oversight.

• Coordination with other regulators: Overlapping jurisdiction with prudential bank regulators, state attorneys general, and state financial regulators can create gaps, duplication, or inconsistent expectations for supervised firms.

What this means for 2026

• Regulatory uncertainty for firms: Banks and nonbanks face shifting expectations on fees, data access, credit underwriting, and disclosures as the CFPB balances aggressive policy goals with court and congressional pushback.

• Potential changes to rules and structure: Depending on court decisions and legislative initiatives in 2026, the CFPB could see changes to its funding model, leadership structure, or specific authorities, with ripple effects across consumer‑finance markets.