CFPB Opens Comment Period to Roll Back Nonbank Supervision Regulations

The Consumer Financial Protection Bureau (CFPB) has considered cutting back on the number of nonbank companies it supervises in the debt collection, auto finance, international money transfer, and consumer credit reporting markets. The rulemaking is currently in the beginning stages, where the Bureau has opened a comment period for consumers and businesses to ask questions and raise initial concerns.

“The Bureau is concerned that the benefits of the current threshold[s] may not justify the compliance burdens for many of the entities that are currently considered larger participants in this market, and that the current threshold[s] may be diverting limited Bureau resources to determine whom among the universe of providers may be subject to the Bureau’s supervisory authority and whether these providers should be examined in a particular year,” said the CFPB in its disclosures, according to PYMNTS.

The comment period is active until the end of September. The rules that define the participants date back to 2012 and 2015, so the CFPB expects that many comments will discuss that the rules created more than a decade ago could not have predicted the ways the fintechs and other providers have evolved.

Bloomberg Law noted that the CFPB’s latest proposals that were formally published in the Federal Register earlier this month mark the latest rollback of the Bureau’s work under acting Director Russell Vought. In April, Vought ordered the agency’s examination to cut supervision events in half and focus on traditional banks.

The consumer credit reporting industry was the first to be subject to the CFPB rule in 2012, when all companies with more than $7 million in annual receipts from consumer reporting activities were made subject to supervision. Now, the CFPB is considering moving the threshold to cover credit reporting companies with more than $41 million in annual revenue.

The CFPB’s debt collection rule details that nonbank entities with more than $10 million in annual receipts are “larger participants,” but raise concerns that “some of the facts that were used to justify a threshold of $10 million have changed in the intervening years” since the threshold was established in 2012.