With authorities regulation of the patron monetary providers industry on the wane, can self-regulation assist fill the void?
Earlier this month, the nonprofit Financial Health Network launched a set of standards for checking accounts and bank cards that it hopes shall be adopted voluntarily by banks, credit score unions and fintechs.
The FinHealth standards, which give attention to enabling shoppers to raised handle their very own spending, are solely step one in an effort to develop a playbook aimed toward enhancing clients’ monetary well being. The group hopes to finally develop benchmarks for financial savings accounts and different varieties of lending merchandise.
“Our imaginative and prescient is de facto to create a library of standards that handle a very powerful monetary services that assist folks spend, save, borrow and plan,” Jennifer Tescher, the Financial Health Network’s founder and CEO, advised American Banker.
The standards for bank cards and checking accounts have been developed in collaboration with industry leaders. They do not name for main product overhauls. Instead, they is perhaps characterised as recommending a collection of consumer-friendly tweaks.
For instance: Credit card issuers would give cardholders the power to decide on the due date for their month-to-month funds, and they might solely supply a credit score line enhance when the client requests one.
Checking account suppliers would expedite the supply of funds on sure deposits. They would additionally increase eligibility for price waivers, maybe by providing them to clients who make a minimal variety of debit-card purchases every month.
The standards additionally embody: providing spending controls; offering high-quality budgeting instruments; making data totally out there in Spanish; and guaranteeing that clients can end key duties over the telephone for free.
At the top of the summer time, the Financial Health Network plans to launch an evaluation that appears at how nicely massive U.S. banks, credit score unions and fintechs are performing in opposition to its standards.
Some of the really useful merchandise and instruments are at the moment out there within the market. But Tescher indicated that adoption by monetary establishments is at the moment pretty low. “I believe what I might say is that, throughout the board, there may be great room for enchancment,” she mentioned.
Still, as a part of the Financial Health Network’s preliminary evaluation, the Chicago-based nonprofit group doesn’t plan to establish particular person monetary establishments publicly by identify.
“Our aim — or our perception — is that via the longstanding relationships that we have constructed with corporations and organizations, that we’ll have seeded the bottom,” Tescher mentioned. “And as we proceed to socialize and put out extra standards for totally different sorts of merchandise, we’ll see whether or not we have to create different mechanisms for driving adoption.”
For now, the Financial Health Network is difficult monetary establishments to establish — by the top of yr — one particular normal that they are going to work to undertake.
Financial Health Network founder and CEO Jennifer Tescher
“First, we’re encouraging corporations to do a self-assessment,” Teacher mentioned. “And it is not terribly difficult to do. These are discrete merchandise we’re speaking about, and our standards are very explicit.”
The Financial Health Network’s standards weren’t designed to behave in its place for authorities regulation. In truth, the group began creating them a few yr in the past — previous to the November election that introduced a wave of deregulation to Washington, D.C. The aim is to enhance present client protections.
But Tescher argues that self-regulatory standards will help monetary suppliers fight low ranges of belief amongst shoppers. She factors to the Edelman Trust Barometer, which not too long ago discovered that 62% of all U.S. respondents imagine that enterprise leaders actively mislead folks by saying issues they know are both false or gross exaggerations.
“So whenever you couple that with the administration’s pullback in client monetary safety, if you happen to’re a monetary supplier, you’ve got actually obtained to ask your self, ‘What else do I have to be doing to construct and retain the belief of my clients?'” Tescher mentioned. “I believe voluntary standards like these are an vital manner to try this.”
How efficient is self-regulation?
There are skeptics, although.
Jim McCarthy performed a key function in constructing the Consumer Financial Protection Bureau’s criticism database. He questions the efficacy of each industry-imposed standards usually and the Financial Health Network’s explicit suggestions.
“It does not work if you happen to ask an industry to do one thing they are not going to do,” McCarthy advised American Banker, arguing that industry-imposed standards are inevitably positioned at some extent of compromise between what shoppers want and what corporations are keen to do.
“And so usually talking, they by no means meet the wants of the patron,” he mentioned. “The different factor is that they’re inflexible. They’re so troublesome to place in place, and so troublesome to ascertain, that they develop into inflexible.”
McCarthy, who left the CFPB in 2015, is the founder and chairman of McCarthy Hatch, a consulting agency that analyzes the patron bureau’s criticism information in an effort to glean insights for shoppers.
After being contacted by American Banker, McCarthy ran an evaluation of some 1,050,000 complaints submitted to the CFPB between April 30, 2023 and April 30, 2025, — in an effort to find out how regularly shoppers have been expressing gripes about issues addressed by the Financial Health Network’s standards.
“So mainly I took the usual and mentioned, ‘How nicely have we executed during the last two years on these areas that the usual is trying to handle?'” McCarthy mentioned.
As a part of his evaluation, McCarthy took the FinHealth standards and matched them with labels his agency has developed for categorizing CFPB complaints.
His findings point out that many shoppers are involved about charges and unclear disclosures. But the CFPB obtained few or no complaints that have been categorized as being linked to another FinHealth standards.
“The mismatch means that some parts of the FinHealth Standards could also be fixing for theoretical issues slightly than these actively skilled and reported by shoppers,” McCarthy wrote in an electronic mail.
“If the aim of the FinHealth Standards is to information significant industry reform, they should be grounded within the precise lived expertise of shoppers,” he added. “As the usual matures, a data-driven suggestions loop utilizing criticism evaluation ought to be embedded into its revision course of.”
Marisa Walther, vp of economic providers options on the Financial Health Network, responded that her group’s standards supply steering on get issues proper — in distinction with complaints, which regularly replicate clients’ unhealthy experiences.
“People not often file CFPB complaints about not getting access to budgeting instruments, early pay, or guardrails on credit score line will increase — not as a result of these options do not matter, however as a result of they’ve by no means been supplied higher,” Walther mentioned in an electronic mail. “You cannot ask for what you’ve got by no means seen.”
“Yet analysis reveals these sorts of options can meaningfully enhance monetary well being over time,” she added.
Walther additionally mentioned the standards is not going to be static.
“As extra establishments undertake the FinHealth Standards and share their experiences, and as extra information turns into out there, we’ll proceed to construct on this basis. That might embody incorporating new areas of analysis, lifting up implementation examples, and analyzing criticism developments or different outcomes to sharpen our collective understanding of what works,” she mentioned.
Why are voluntary banking standards rising now?
These standards are gaining consideration resulting from diminished federal oversight of client monetary providers, prompting the industry to discover self-regulation.
How do these new banking standards profit shoppers?
They encourage banks to supply consumer-friendly options like spending controls, sooner fund availability, and improved monetary instruments.
