WASHINGTON— The Consumer Financial Protection Bureau (CFPB) is proposing certain nonbank financial firms be required to register with the Bureau when they become subject to certain local, state, or federal consumer financial protection agency or court orders.
The CFPB said it is further proposing to publish the orders and company information via an online registry, with larger companies subject to the CFPB’s supervisory authority being required to designate an individual to attest whether the firm is adhering to registered law enforcement orders.
The CFPB said its proposed rule would help the agency identify and mitigate risks to American households and ensure that supervised companies perform their obligations to consumers.
“Congress, in creating the CFPB, tasked it with monitoring for risks to consumers in the offering or provision of consumer financial products and services and supervising the activities of certain nonbanks,” the CFPB said in making its announcement. “Because the issuance of agency and court orders serves as one of the most important tools to pursue lawbreakers in these markets, it is important that the CFPB maintain a central repository of nonbanks subject to agency and court orders.”
‘Powerful Source of Information’
The CFPB said the repository will allow it to track and mitigate the risks posed by repeat offenders, while also being able to monitor all lawbreakers subject to agency and court orders. The CFPB said it will share the “powerful source of information” with others, including with fellow regulators and law enforcement agencies, by making the registry public.
“The registry will help unify the efforts of consumer financial protection enforcers, as well as provide the increased transparency and coordination that are critical to ensuring accountability and fairness in the marketplace,” the CFPB said.
The Bureau added the proposal will enhance market monitoring and risk-based supervision efforts to ensure that the CFPB and its enforcement partners can identify previous lawbreakers and are positioned to take action to stop further large-scale harm or continued illegal efforts across the country.
The Specifics
More specifically, the CFPB said it is proposing:
- Covered nonbanks would report certain agency and court orders connected to consumer financial products and services. “Generally, nonbanks would have to report final agency and court orders and judgments, including consent and stipulated orders, brought under federal consumer financial protection laws or state laws regarding unfair, deceptive, or abusive acts or practices.”
- Larger supervised nonbanks would designate a senior executive to attest regarding the firm’s compliance with covered orders. “Larger nonbanks that are supervised by the CFPB would be required to designate a senior executive to submit an annual supervisory written statement attesting to the steps taken to oversee the activities subject to the order and whether the executive knows of any violations of, or other instances of noncompliance with, the covered order.”
Additional Plans
In addition to publishing information about the agency or court order, the CFPB said it is considering publication of certain registration information about the company via release on the CFPB’s publicly available website.
“While the CFPB might later consider collecting or publishing the information described in the proposal from insured banks and credit unions, there is currently greater need to collect this information from nonbanks under its jurisdiction,” the Bureau said. “Among other things, the identity and size of all insured banks and credit unions are known to the CFPB. Also, there are only four federal prudential regulators for insured banks and credit unions, and they regularly publish their consumer financial protection orders.
“In contrast, comprehensive, readily accessible information is lacking about the identity of orders issued against nonbanks subject either to the CFPB’s market monitoring authority or to its supervisory authority across the various markets for consumer financial products and services,” the Bureau continued.
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