CFPB Drops Enforcement of Nonbank Registry

Last week, the Consumer Financial Protection Bureau (CFPB) announced that it will not prioritize enforcement of a regulation creating a registry for nonbank financial companies that have broken consumer laws and have been subject to government or court orders. The regulation, “Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders” was announced by the Bureau in June 2024.

“The Bureau will instead continue to focus its enforcement and supervision activities on pressing threats to consumers,” said the CFPB in a press release. “The Bureau is further considering issuing a notice of proposed rulemaking to rescind the regulation or narrow its scope.”

At the time the regulation was announced, the CFPB stated that not only did nonbank companies have to register with the agency when it violated consumer law, but they also had to provide an attestation from a senior executive that the company complies with relevant orders. The registry was designed to help law enforcement identify and stop repeat offenders. 

Financial regulators did not provide cost-benefit analyses as to how the broadened disclosures would affect and improve earlier procedures. They also did not express what the impact might be to firms and their consumers at the time of the regulation.

In a letter to the CFPB in March 2023, the U.S. Chamber of Commerce said “the Proposed Rule would impose very real costs upon consumer financial services companies that are subject to its requirements, including by driving up compliance costs through an unlawful executive attestation requirement.”

In its press release, the CFPB stated that it hopes to give “regulatory relief” from the requirements of the registry for small loan providers.