SEC Should Finalize its Proposed Climate Disclosure Rule Without Undue Delay
CFA submitted comments to the Securities and Exchange Commission (SEC) in support of its proposal to enhance and standardize climate-related disclosures for investors, urging speedy finalization of the proposed amendments to the SEC’s disclosure rules. The proposed rule is urgently needed because current voluntary climate-related disclosures are inconsistent and fail to provide investors with the reliable, decision-useful information they need to reasonably assess public companies’ risks related to climate change. Accordingly, the proposal would establish a clear and standardized disclosure framework, thereby enhancing the reliability and consistency of climate-related information that would benefit both investors and markets.
In response to investors demanding more, better climate-related information, the SEC’s proposed rule would require public companies to provide specific information about the climate-related risks they face, how they manage these risks, and the financial impacts that climate change has or is likely to have on their businesses. According to the SEC’s proposal, “Investors need information about climate-related risks—and it is squarely within the Commission’s authority to require such disclosure in the public interest and for the protection of investors—because climate-related risks have present financial consequences that investors in public companies consider in making investment and voting decisions.”
“We are pleased to support this proposal to enhance and standardize climate-related disclosures for investors, and we are encouraged that the SEC is one step closer to providing investors with the climate-related information they need to make informed investment decisions,” said Dylan Bruce, CFA’s Financial Services Counsel.
In its comment letter, CFA wrote that although there are various factors driving the demand for better climate-related disclosures, chief among them is the “growing consensus that climate change may present a systemic risk to financial markets.” The letter adds that both retail and institutional investors are “demanding better climate-related disclosures that can inform better investment decision making,” and the proposal is “essential if the Commission is to fulfill its public interest mission to protect investors, promote fair, orderly, and efficient markets, and facilitate capital formation.”
According to CFA’s comments, “Investors need this information to make fully informed capital allocation decisions, to manage their portfolio risks, and to engage effectively in the oversight of the companies whose shares they own,” and “without adoption of the Proposed Amendments, investors would continue to remain hamstrung from fully considering or understanding the climate-related risks that may impact their investments.”
Groups Support Committee Vote to Close the Industrial Loan Company Loophole
CFA joined a broad coalition of banks, credit unions, and consumer groups in support of the U.S. House Committee on Financial Services vote to close the industrial loan company (ILC) loophole. The “Close the ILC Loophole Act” (H.R. 5912) will now head to the floor for consideration by the entire legislative body. Industrial loan companies are FDIC-supervised institutions that are owned by commercial firms that are not regulated by a federal banking agency.
Currently, the ILC loophole allows Big Tech and other nonbank companies to offer financial products and services without being subject to the same oversight, safeguards, or limitations on the mixing of banking and commerce that Congress has established for the rest of the U.S. financial system. The proposed legislation would help eliminate legal disparities between ILC parent companies and bank holding companies by imposing consistent regulatory and supervisory expectations.
“With today’s vote, the Committee is one step closer to strengthening the financial system by closing the ILC loophole, and we call on Congress to take up this legislation without delay,” the organizations wrote. “The current version of the legislation helps preserve the longstanding separation between banking and commerce and restricts Big Tech companies from circumventing existing rules by using a loophole to enter the banking system. This effort reflects the extraordinary bipartisan work by Representatives Jesús “Chuy” García and Lance Gooden to collaborate with stakeholders to reach a solution, and it serves as an acknowledgment that there is no justifiable reason for two similar institutions offering indistinguishable products or services to be treated differently under the law.”
FTC Must Update Its Funeral Rule to Improve Price Competition
CFA and the Funeral Consumers Alliance (FCA) released a new report this month on the extent to which funeral homes post prices online, the importance of doing so, and the need for the Federal Trade Commission (FTC) to update its Funeral Rule to require this posting.
Currently, the FTC’s Funeral Rule requires funeral homes to maintain a detailed price list and to hand it to consumers visiting and discussing services with the funeral home. The report noted that while the FTC’s current rule has reduced deception and fraud, it has not facilitated comparison shopping of relatively expensive funeral services purchased by consumers, and that only a small minority of funeral homes have allowed consumers to view their price lists on their websites to compare prices of more than one funeral home.
A May 2022 Ipsos survey of 2,009 representative Americans found that 75 percent of participants favor, and only three percent oppose, mandatory price posting for funeral homes with a website. The report found that only 18 percent of 1,046 funeral homes in 35 cities posted their price lists online. The refusal of most funeral homes to post prices online not only makes it difficult for grieving families planning funerals to collect and compare price information, but it also makes it difficult for third party information providers, such as consumer groups and journalists, to collect and compare this information.
“Online price posting would benefit not just those consumers searching for price information, but also all consumers by encouraging price competition and discouraging funeral homes from charging exorbitant prices,” said Stephen Brobeck, a CFA Senior Fellow and the report’s co-author.
There were major differences in percentages of funeral homes posting prices among 35 cities. The report found that in Sacramento, because California requires online posting, 70 percent of 45 funeral homes posted prices. In states without rules requiring posting, the numbers were significantly lower. In April 2020, CFA and FCA submitted comments to the FTC in response to the agency’s announcement that it was considering updating the Funeral Rule to improve price competition. The FTC is still considering whether to initiate formal rulemaking.
“Requiring funeral homes with websites to conspicuously post their general price lists would benefit consumers, and promote price competition, both directly and indirectly,” the report stated. “Consumers who viewed online price disclosures would, for the first time outside California, be able to compare prices of a large number of funeral homes with relatively little effort, facilitating decisions that maximized consumer value.”
CFA Supports USDA Plan to Disclose Genetic Data on Foodborne Pathogens, Urges Agency to Reduce Delays
CFA submitted comments to the U.S. Department of Agriculture’s Food Safety and Inspection Service (FSIS) in support of its plan to disclose genetic data associated with pathogens found in the agency’s microbiological sampling program.
Starting this July, the FSIS will make available whole genome sequencing (WGS) data on Listeria monocytogenes, Salmonella, Campylobacter, and Shiga toxin producing Escherichia coli (E. coli) pathogens found in FSIS inspector collected samples. According to the comments, this plan will “increase transparency and further understanding of the root causes contributing the foodborne illnesses” and will allow “researchers to better connect the dots between contamination events and human illnesses.”
In the comments, CFA also urged the FSIS to increase the frequency in which it updates their datasets on laboratory sampling results, shifting from updating on a quarterly basis to as close to real time as possible.
“In general, greater transparency leads to greater accountability, and that is why FSIS should seek to post WGS data as soon as possible, not just on a quarterly basis,” Thomas Gremillion, CFA’s Director of Food Policy, wrote in the comments. “Just a few days elapse from the time that an FSIS inspector collects a sample, to the time that WGS data is generated. With the current quarterly reporting, however, WGS data is not available until at least four months after a sample is collected. As new pathogens emerge, having close to real-time data may enable some companies to change suppliers or make other changes that mitigate food safety risk. FSIS should help to accommodate that behavior.”
Advocates Urge Court to Protect Washington State’s Temporary Ban on Use of Credit History in Insurance Pricing
CFA, the Northwest Justice Project (NJP), and the Northwest Consumer Law Center (NWCLC) submitted a joint amicus brief to the Thurston County Superior Court urging it to uphold a Washington state regulation that temporarily prohibits the use of credit history in insurance pricing issued by the Office of the Insurance Commissioner earlier this year.
The organizations wrote that the current regulation is “necessary to address the growing credit history crisis facing financially vulnerable Washingtonians in the wake of the pandemic,” and that because the pandemic has disproportionately harmed communities of color and lower-income consumers “using credit scores at this moment will illegally amplify unfair discrimination in the state’s insurance markets.”
In Washington, auto insurers have historically used consumers’ credit history to charge higher premiums to drivers with lower credit, even if they have a perfect driving record. A CFA analysis of premium data charged by the ten largest auto insurers in every ZIP code in the state of Washington showed that drivers with perfect driving records, but different credit scores (excellent, fair, or poor) pay widely different annual premiums.
“As the economic pain of the pandemic starts showing up on consumers’ credit scores, it’s critical that the Insurance Commissioner’s consumer protection rules take effect,” said Doug Heller, CFA’s Director of Insurance. “So many safe drivers and responsible homeowners and renters are facing insurance premium hikes simply because the pandemic wreaked havoc on their finances and credit. That’s not fair, and as the Commissioner has rightly pointed out, it’s illegal under Washington law, which is why the Court must uphold these rules and end the insurance industry’s obstructionism.”
Consumer Advocates Come Together for CFA’s 56th Annual Consumer Assembly
On June 15, CFA hosted its 56th Annual Consumer Assembly, and the Federation’s first hybrid event. With 108 in-person and 86 online attendees, CFA prioritized safety above all, providing masks and distancing guidelines, and hosted a safe and successful conference with prominent keynote speakers. To watch the full conference, click here.
This year’s keynote speakers were Representative Pramila Jayapal (WA-7), North Carolina Attorney General Josh Stein, Consumer Financial Protection Bureau Deputy Director Zixta Martinez, and U.S. Consumer Product Safety Commission Chair Alex Hoehn-Saric. Consumer Assembly 2022 included numerous panel discussions on a wide range of topics covering the latest challenges being faced by consumers, such as: the impact of systemic racism in advocacy, the dangers of harmful online content, the impact of climate change, the importance of competition, the housing market crisis, and the dangers of online purchasing.
We thank all of those who participated and attended.