CFPB Seeking Public Input on Nonbank Supervision Program
On June 23, 2011, the Consumer Finance Protection Bureau (“CFPB”) announced the publication of a Notice and Request for Comment (“Notice”) seeking public comment on its nonbank supervision program. The Dodd-Frank Wall Street Reform and Consumer Protection Act leveled the regulatory landscape between banks and nonbanks by allowing the CFPB to supervise and subject to examinations certain nonbank financial companies providing consumer finance services and products in the same manner that banks, thrifts and credit unions historically have been supervised by federal regulators.
Dodd-Frank provides that the CFPB may supervise mortgage companies, payday lenders, and private education lenders of all sizes. Before doing so, the CFPB must develop rules identifying “larger participants” from other consumer financial industries for possible inclusion for CFPB supervision. The CFPB’s Notice identifies six such consumer financial services and products: debt collection; consumer reporting; consumer credit and related activities; money transmitting, check cashing and related activities; prepaid cards and debt relief services. The rules will identify the criteria used to identify “larger participants” within these six other industries that will be subject to CFPB supervision.
Though the Notice and the final rules will only address the criteria for nonbank “larger participants,” it should be noted that the Bureau can still regulate nonbank consumer financial service providers that do not qualify under the larger participant rules through its broad authority to regulate and prohibit unfair, deceptive or abusive business practices and consumer financial products.
A copy of the Notice is available for download here. Interested parties are encouraged to submit comments to the CFPB within forty-five days in response to the considerations discussed in the Notice and Request for Comment. The deadline for the finalized rule is July 21, 2012.