With government regulation of the consumer financial services industry
Earlier this month, the nonprofit Financial Health Network released a
The FinHealth standards, which focus on enabling consumers to better manage their own spending, are only the first step in an effort to develop a playbook aimed at improving customers’ financial health. The group hopes to eventually develop benchmarks for savings accounts and other types of lending products.
“Our vision is really to create a library of standards that address the most important financial products and services that help people spend, save, borrow and plan,” Jennifer Tescher, the Financial Health Network’s founder and CEO, told American Banker.
The standards for
For example: Credit card issuers would give cardholders the ability to choose the due date for their monthly payments, and they would only offer a credit line increase when the customer requests one.
Checking account providers would expedite the availability of funds on certain deposits. They would also expand eligibility for fee waivers, perhaps by offering them to customers who make a minimum number of debit-card purchases each month.
The standards also include: offering spending controls; providing high-quality budgeting tools; making information fully available in Spanish; and ensuring that customers can finish key tasks over the phone for free.
At the end of the summer, the Financial Health Network plans to release an assessment that looks at how well large U.S. banks, credit unions and fintechs are performing against its standards.
Some of the recommended products and tools are currently available in the marketplace. But Tescher indicated that adoption by financial institutions is currently fairly low. “I think what I would say is that, across the board, there is tremendous room for improvement,” she said.
Still, as part of the Financial Health Network’s initial assessment, the Chicago-based nonprofit organization does not plan to identify individual financial institutions publicly by name.
“Our goal — or our belief — is that through the longstanding relationships that we’ve built with companies and organizations, that we will have seeded the ground,” Tescher said. “And as we continue to socialize and put out more standards for different kinds of products, we’ll see whether we need to create other mechanisms for driving adoption.”
For now, the Financial Health Network is challenging financial institutions to identify — by the end of year — one specific standard that they will work to adopt.
“First, we’re encouraging companies to do a self-assessment,” Teacher said. “And it’s not terribly complicated to do. These are discrete products we’re talking about, and our standards are very particular.”
The Financial Health Network’s standards were not designed to act as a substitute for government regulation. In fact, the group started developing them about a year ago — prior to the November election that brought a
But Tescher argues that self-regulatory standards can help financial providers combat low levels of trust among consumers. She points to the
“So when you couple that with the administration’s pullback in consumer financial protection, if you’re a financial provider, you’ve really got to ask yourself, ‘What else do I need to be doing to build and retain the trust of my customers?'” Tescher said. “I think voluntary standards like these are an important way to do that.”
How effective is self-regulation?
There are skeptics, though.
Jim McCarthy played a key role in building the Consumer Financial Protection Bureau’s
“It doesn’t work if you ask an industry to do something they’re not going to do,” McCarthy told American Banker, arguing that industry-imposed standards are inevitably placed at a point of compromise between what consumers need and what companies are willing to do.
“And so generally speaking, they never meet the needs of the consumer,” he said. “The other thing is they’re rigid. They’re so difficult to put in place, and so difficult to establish, that they become rigid.”
McCarthy, who left the
After being contacted by American Banker, McCarthy ran an analysis of some 1,050,000 complaints submitted to the CFPB between April 30, 2023 and April 30, 2025, — in an effort to determine how frequently consumers were expressing gripes about problems addressed by the Financial Health Network’s standards.
“So basically I took the standard and said, ‘How well have we done over the last two years on those areas that the standard is attempting to address?'” McCarthy said.
As part of his analysis, McCarthy took the FinHealth standards and matched them with labels his firm has developed for categorizing CFPB complaints.
His findings indicate that many consumers are concerned about fees and unclear disclosures. But the CFPB received few or no complaints that were categorized as being connected to some other FinHealth standards.
“The mismatch suggests that some components of the FinHealth Standards may be solving for theoretical problems rather than those actively experienced and reported by consumers,” McCarthy wrote in an email.
“If the goal of the FinHealth Standards is to guide meaningful industry reform, they must be grounded in the actual lived experience of consumers,” he added. “As the standard matures, a data-driven feedback loop using complaint analysis should be embedded into its revision process.”
Marisa Walther, vice president of financial services solutions at the Financial Health Network, responded that her organization’s standards offer guidance on how to get things right — in contrast with complaints, which often reflect customers’ bad experiences.
“People rarely file CFPB complaints about not having access to budgeting tools, early pay, or guardrails on credit line increases — not because those features don’t matter, but because they’ve never been offered better,” Walther said in an email. “You can’t ask for what you’ve never seen.”
“Yet research shows these kinds of features can meaningfully improve financial health over time,” she added.
Walther also said the standards will not be static.
“As more institutions adopt the FinHealth Standards and share their experiences, and as additional data becomes available, we’ll continue to build on this foundation. That may include incorporating new areas of research, lifting up implementation examples, and analyzing complaint trends or other outcomes to sharpen our collective understanding of what works,” she said.
Why are voluntary banking standards emerging now?
These standards are gaining attention due to reduced federal oversight of consumer financial services, prompting the industry to explore self-regulation.
How do these new banking standards benefit consumers?
They encourage banks to provide consumer-friendly features like spending controls, faster fund availability, and improved financial tools.
