Consumer Financial Protection BureauWe have referenced the Consumer Financial Protection Bureau, commonly referred to as the CFPB, frequently in recent years due to its role in protecting and promoting consumer safety in the financial world. Beyond our website, it’s likely that you’ve heard the bureau’s name or acronym invoked at least once in recent months as it has become the center of some intense debates within the current federal government. Whether you’ve heard of the CFPB before this moment or not, chances are you might not understand exactly what it is, what it does and why it matters — or what the big fuss happening right now surrounding the appointment of a new director is all about. To help you get to the bottom of these questions and more, we’re outlining the key things you need to know about this federal consumer watchdog agency.

What is the Consumer Financial Protection Bureau?

Originally created in 2010 by the Obama administration, the Consumer Financial Protection Bureau is a federal agency that aims to assist consumers by creating and enforcing rules for fair financial practices. According to the first post written by Senator Elizabeth Warren, who was drafted by President Obama to help set up the bureau during its inception, the primary goal of the CFPB at its start was to help level the playing field and simplify financial regulation. Up until that point, the responsibility for protecting consumers was scattered among numerous federal agencies, making it difficult for any kind of unified decisions or actions to be taken against companies or industries that harmed consumers. To help maintain the integrity of the bureau’s mission and prevent companies from being able to bribe their way to softer treatment, the CFPB was set up to be independent from the rest of the federal government. In its brief, but productive time in operation, the bureau has helped obtain $11.9 billion in relief to more than 29 million consumers who have been harmed by bad financial practices, and fielded 1.2 million consumer complaints.

While mortgage lenders were one of the initial focuses of the bureau at its start, on the heels of the housing crisis, it has tackled a number of big fish in the years since — JPMorgan Chase, Experian and Wells Fargo, to name a few — as well as plenty of smaller companies which have harmed consumers in industries ranging from payday lending to student loans to medical billing.

What can the CFPB do for someone like me?

One of the primary functions of the CFPB is to provide consumers a place to lodge complaints about predatory, deceptive or unfair practices they encounter from financial companies and institutions. Sometimes, consumers can feel as though they have nowhere to turn or they might not know how to cut through the red tape to get in touch with a company. When you file a complaint with the CFPB, the bureau works to ensure that the company in question takes responsibility for their actions and provides you with a reasonable response. Submitting a complaint is a fairly simple process — you will be asked to choose the type of product or service you’re complaining about (e.g., a credit card, a mortgage, debt collection, a vehicle loan, etc.), name the company in question and describe the problem you’re having, along with any steps you’ve taken to address the problem. You can submit documents to back up your claims, and the CFPB also asks what complainants think would be a fair resolution to the situation. Once your complaint has been submitted, the CFPB will reach out to the company and do its best to get your problem resolved. According to the bureau, there’s a 97% success rate in getting a response once it is involved — and often, as noted above, that response includes redress in the form of money returned.

The other important function of the CFPB is to provide information to consumers so they can make smart financial decisions. All complaints handled by the bureau are logged, and you can look through a database of consumer complaints to see whether a company you’re considering doing business with has a history of mistreating its customers. The CFPB logs each complaint within 15 days, whether the company has responded or not. In addition to this information, the bureau also collects and publishes research data, provides articles and educational insights on consumer finance topics and offers resources for practitioners to provide their customers or clients. You might see some similarities between the CFPB and the Better Business Bureau, and you’d be correct in drawing that conclusion — both are watchdog agencies; however, it’s important to note that the CFPB has federal power behind it, whereas the Better Business Bureau does not.

Why are some people against it?

A government agency dedicated entirely to protecting consumers against predatory or harmful financial practices by companies seems like something that should be embraced by most, but in its time the CFPB has come under sharp and severe criticism from many different people and entities. Some view it as a symbol of government overreach and that its practices are too aggressive or controversial, and leave companies hurting under increased compliance costs while reducing the number of credit opportunities that vulnerable consumers have to access. Others are concerned with the bureau’s centralized power structure — unlike the SEC or FDIC, there is no executive board that helps make decisions. Everything falls under the power of the director, who can only be removed by the president under certain circumstances, and that has led to some concern that an abuse of power could result from this lack of accountability. In fact, questions over who will be responsible for directing the CFPB have taken center stage in the political spotlight in just the past few days.

Why is there a battle happening over bureau leadership?

Richard Cordray, the first director of the CFPB, officially resigned his position on Nov. 24 in a letter to the president. This resignation led to a scramble for power between the bureau’s deputy director, Leandra English, and Mick Mulvaney, who also serves as the Office of Management and Budget director and has frequently bashed the CFPB. According to a tweet from Elizabeth Warren, who, as we noted earlier, helped set up the bureau, the deputy director assumes the role of acting director if the position becomes vacant; however, shortly after Cordray’s resignation, Trump appointed Mulvaney as interim director. A request for an emergency restraining order filed by English to prevent Mulvaney from assuming the position was denied by a U.S. District Judge on Nov. 28, and both would-be directors showed up on Monday ready to work. It’s unlikely that this issue will go away anytime soon, as the judge acknowledged some potential constitutional issues with the presidential appointment, and neither side seems ready to back down. Critics of the Mulvaney appointment have brought up the fact that an acting director who is a sitting White House official as well as an outspoken critic of the bureau is counterproductive to the purpose and design of the agency. On the other side, the Department of Justice has stated that the President has the right to appoint an interim director of his choosing due to the federal Vacancies Reform Act of 1998.

Ultimately, no matter who winds up being the interim director, the president will eventually need to nominate a full-time director for the CFPB, to be confirmed by the Senate. In the meantime, it’s important for consumers to understand what this agency is all about, and why it’s become the subject of so much debate in recent weeks. To learn more about consumer finance topics, follow our personal finance blog.