The financial crisis of the late 2000s, aka the “Great Recession,” was supposed to be a wake-up call that the nation’s big financial institutions were out of control. And to some degree, it was. Among other things, the economic collapse resulted in the Dodd-Frank Wall Street Reform and Consumer Protection Act, a major piece of regulatory legislation designed to reign in fraudulent and predatory banking practices, and the creation of the Consumer Financial Protection Bureau (CFPB).
But, problems persist, both big and small. In the past few years, we have witnessed not one, but two major banking scandals by Wells Fargo— one involving fake accounts and another involving unneeded auto insurance being forced on borrowers— as well as massive data breaches impacting credit bureaus, rampant abuse by payday lenders and other high interest lenders, and a string of staggering money laundering revelations.
So, what can be done? Part of the issue is structural and change will have to come from the financial institutions themselves. Finance is complicated and with ever increasing frequency, key decisions about complex financial topics are being foisted on hapless consumers. With pensions largely a thing of the past and borrowing money ever more risky, inexperienced consumers are being asked to make judgments on things they know nothing about, with potentially life-altering consequences.
If financial institutions want to thrive in today’s market, they must focus more on helping consumers and less on making money any way the possibly can. This means putting the customer first and understanding the type of experiences that customers want.
Beyond that, if the government is unwilling to provide public enforcement, it should at least clear the way for private plaintiffs to take over. The current combination of lax government oversight and de facto immunity from class actions is unacceptable. At a minimum, the government should step up and reinstate the ban on class action waivers in financial service agreements so that consumers aren’t left with nothing. Strengthening private enforcement remedies to include statutory penalties or damage multipliers would help as well. Simply put, no accountability means no change.
Read the full article here. (Source The Daily Journal).
David S. Casey, Jr. is managing partner and Jeremy K. Robinson is a partner with San Diego-based Casey Gerry Schenk Francavilla Blatt & Penfield, LLP. Robinson is chair of the firm’s Motion and Appellate Practice.