When’s the last time a lawmaker needed a small-dollar loan?

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Consumer needs are constantly evolving and the best companies know the key is to listen and innovate according to their customer demands. But there’s a roadblock ahead.

The one place where innovation lags or worse, is killed, is Washington.

Instead of advancements, onerous rules and regulations are mandated that too often do more to harm consumers than protect them. This month’s National Consumer Protection Week presents an opportunity for lawmakers and regulators to step down from their ivory towers, stop regurgitating the same talking points, and take a moment to understand and listen to the ever-changing needs of consumers.

Washington must realize the consumer landscape has dramatically changed in recent years. In the financial services sector specifically, consumers increasingly demand more convenience and choice; greater access on their phones, tablets and laptops; personalized services and full transparency.

Whether it’s the products and services consumers need or the way in which they want to access them, Washington is always last to understand this. Worse, when they attempt to protect these evolving needs, they fail.

This couldn’t be more true than in the case of the Consumer Financial Protection Bureau’s misguided 2017 small-dollar loan rule crafted under former Director Richard Cordray that would have severely restricted access to legal, small-dollar loans for millions of Americans.

Rather than conducting or even considering rigorous, empirical research to support its pre-determined assumptions, the CFPB under Cordray primarily relied on anecdotes and supportive comments from activists and special interests to craft the rule — largely at the expense of actual consumers.

Many of these activist groups are based in Washington and have never used a small-dollar loan. The CFPB, now under Director Kathy Kraninger, will soon have the opportunity to right this wrong by truly listening to consumers who use small-dollar loans as it prepares to revise the 2017 rule. Moreover, the bureau should ground its conclusions in nonpartisan data and research.

Those closest to consumers have a better track record of protecting them. State regulators and lawmakers across the country have routinely worked with the financial services industry on commonsense regulations that genuinely aim to protect consumers, while appropriately balancing access to credit.

A recent example is in the state of Utah, where several lenders (and members of the Community Financial Services Association of America) quickly engaged state lawmakers to support legislation that would raise safeguards for consumers against predatory lenders.

Real solutions that protect consumers and take out bad actors can be achieved because the regulated, licensed lenders know their customers, hear from them daily and have a presence in their communities. Importantly, the CFPB’s initial rule did absolutely nothing to address the unscrupulous, illegal and unlicensed lenders.

There are bad actors across all sectors of the financial services industry who engage in unethical practices that hurt consumers. When these practices tarnish the reputation of an industry, it is critical for industry leaders to publicly condemn such practices and more importantly, demonstrate that they adhere to a higher standard of responsible lending.

For example, CFSA members must abide by a strict set of Best Practices for consumer protections that go beyond full compliance with state and federal laws. This includes requiring a full, clear and prominent disclosure of loan fee and term information on poster-sized displays inside all storefronts. Further, the best practices require member lenders to provide customers the right to rescind a short-term loan at no cost on or before the close of the following business day.

Whether it’s at the state or federal level, policymakers and industry leaders have a responsibility to ensure that all Americans are truly protected and are equipped with knowledge of their rights, all while balancing the undeniable demand for access to credit.

The more Washington listens to consumers, the better equipped all Americans will be to make informed and responsible financial decisions to support themselves and their families.

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Payday lending Small-dollar lending Law and regulation CFPB Compliance Kathy Kraninger