As we previously reported, the Obama Administration proposed a broad overhaul of the federal financial regulatory system earlier this year. As part of the overhaul, the Administration, together with Rep. Barney Frank (D-Mass), proposed H.R. 3126 which would create a Consumer Finance Protection Agency (“CFPA”) to act as an independent executive agency with broad authority to regulate the provision of consumer financial products or services, including certain insurance products. On Wednesday, October 21, 2009, according to industry reports, members of the House Financial Services Committee voted to amend H.R. 3126 by exempting insurance companies and their products from CFPA oversight. The approved amendment also prohibits the CFPA from interfering with state insurance regulation, thereby preserving state oversight of insurance companies and products. However, according to industry reports, the amendment does give the CFPA authority to regulate unfair and deceptive practices conducted by persons not subject to state insurance regulation. The House Financial Services Committee passed amended H.R. 3126 on Thursday, October 22, 2009. The bill still faces consideration on the House floor.
We will continue to monitor this topic.
