Despite all it accomplished in its first five years, the Consumer Financial Protection Bureau still has its detractors.

The new Republican Party platform calls the bureau a “rogue agency” and claims “its one-size-fits-all approach to every issue threatens the diversity of the country’s financial system.”

Other critics contend that the consumer watchdog’s enforcement actions and penalties are limiting people’s access to certain financial products, mainly credit.

On that last point, the opponents are right. The Consumer Financial Protection Bureau is working on various rules that could curb access to money for many borrowers.

The bureau is finally focusing its enforcement powers on three key areas: arbitration clauses, payday lending and debt collection.

Arbitration clauses. The bureau was charged by Congress to study the use of mandatory arbitration clauses in consumer financial markets. And in May, the CFPB announced it was proposing rules that would prohibit these clauses.

We as consumers are constantly signing away our rights to sue as a class, thanks to clauses buried in service or product agreements requiring arbitration to settle disputes.

Tort reformists hate that the Consumer Financial Protection Bureau is going after arbitration. Plaintiff lawyers will end up the winners, they contend, and consumers will have to pay more for credit products.

I’m not a big fan of class-action lawsuits because individual consumers rarely get substantial compensation when they win. The judgments always sound impressive, but when you subtract attorney fees and divide the awards among hundreds of thousands – if not millions – of consumers, the payoff for individuals is pitiful. But the lawsuits do have the effect of stopping or curtailing bad and unethical business practices.

Payday and auto title loans. In June, the agency proposed rules to rein in the small-dollar amount loans made to folks who often can’t pay as promised with their next paycheck. The proposed rules would also include auto title loans, which involve people putting up their paid-off vehicles as collateral for a small loan.

When people can’t pay off these loans, they often end up borrowing again, creating a cycle of payday loan dependency. One report by the bureau found that about one in five borrowers who took out an auto title loan had their car or truck seized after failing to pay off the debt. Eighty percent of the time, people using vehicle title loans signed up for another title loan the same day their previous loan was repaid.

With these types of loans, lenders don’t look at ability to pay. Borrowers just need to have a job or clear title to the automobile. Under the proposed rule-making, lenders would have to determine if a consumer could afford the loan when taking into account his or her basic living expenses and major financial obligations.

There would also be a limit on the number of short-term loans people could take out in a row.

Debt collection. In July, the agency said it was considering rules to make sure debt collectors are collecting the right debts from the right people.

Often when companies buy debt, there are few details in the consumer’s file. The new rules could include requiring debt collection companies to verify that a debt was owed before contacting consumers.

Collectors couldn’t oppressively hound people. They would be limited to six attempts at reaching a debtor per week. They’d also have to make clear if the debt they are trying to collect is too old for the borrower to be taken to court.

The proposed rules are already drawing criticism. They will burden the industry, opponents say. Legitimate collection efforts will be harder, critics contend, and the result will be less available credit and higher costs for that borrowed money.

Access to credit is an important economic driver in our economy. But that availability has become an albatross for a lot of people.

People want a credit card so bad that they don’t care if some of their legal rights are restrained. And they find themselves in such a financial bind that they use loans that sink them further into debt.

That’s why the Consumer Financial Protection Bureau has to ignore many of its challengers whose intentions are biased in favor of doing business as usual.

Boilerplate arbitration clauses prevent many consumers from participating in class-action lawsuits, which can force companies to change bad behavior. Payday lenders prey on people with financial challenges or poor money management. And unethical debt collectors are violating the spirit and intent of the Fair Debt Collection Practices Act.

The proposed rules could very well result in limiting consumer choices. And, in many cases, that is exactly what should happen. Some people need protection from bad financial practices, and frankly, their own bad decisions.

Michelle Singletary can be contacted at:

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