CFPB Proposes Rescinding Nonbank Supervision Registry Rule
The Consumer Financial Protection Bureau (CFPB) recently proposed a rescission of its rule requiring nonbank financial firms to register with the agency if they are subject to any court order or regulatory enforcement order. The rule applied to any nonbank entity offering consumer financial products or services.
“The Bureau is proposing to rescind the NBR Rule based upon concern that the costs the rule imposes on regulated entities, and which may in large part be passed onto consumers, are not justified by the speculative and unquantified benefits to consumers discussed in the analysis proffered in the NBR Rule,” wrote CFPB Acting Director Russ Vought, according to Banking Dive.
The rule was issued under the Biden administration, in an attempt to help deter violations of consumer protection laws, as well as help the Bureau, law enforcement, and the public decrease harms from repeat offenders. Consumer Finance Monitor noted that the rule was opposed by the Small Business Administration’s Office of Advocacy, as well as several state regulator associations.
The CFPB under the Trump administration has stated that the rule is “not necessary as a tool to effectively monitor and reduce potential risks to consumers from bad actors as Congress has authorized multiple other Federal and State agencies to enforce Federal consumer financial laws.” In proposing the rescission, the agency stated the costs imposed on nonbanks could be passed on to consumers.
Brandon Milhorn, President of the Conference of State Bank Supervisors, argued that the rule encroaches on state authority, contending that the states have exclusive authority to monitor and enforce compliance with orders based on state law.
Milhorn also wrote that in 2010, state regulators established a fully searchable website allowing consumers to research regulatory orders and company information for state-licensed nonbanks.
“The Nonbank Registry is therefore unnecessary, duplicative of existing resources available to consumers, and a waste of federal funds,” he wrote.
