CFPB Plans for a Registry of Nonbanks
Earlier this month (December 2022), the Consumer Financial Protection Bureau (CFPB) issued a proposed rule that, if finalized, would require nonbank entities to report certain nonpublic agency enforcement actions to the CFPB, for publication in a public database. The purpose of the proposed rule is to allow the CFPB to more effectively monitor and reduce risks to consumers posed by entities that violate consumer protection laws.
Under the proposed rule, nonbank covered persons (but excluding insured depository institutions, credit unions, related persons, states, and certain other entities and natural persons) would be required to register with the CFPB once they become subject to a public written order or judgment that is based on a violation of certain consumer protection laws. Registering entities would need to provide basic identifying information about the entity to the CFPB along with a copy of the order and would be subject to a continuing obligation to ensure registry information is accurate. Information would need to be submitted, and updated, within 90 days of the effective date of the order or the amendment/modification thereto.
In addition, the proposed rule would also require certain nonbanks that are subject to the CFPB’s supervisory authority (e.g., mortgage lenders, large participants, etc.) to, on an annual basis, identify one or more executives responsible for the entity’s efforts to comply with an order identified in the registry.
Covered “consumer financial protection laws” include:
- Any Federal consumer financial law,
- Any laws which the CFPB has authority to enforce,
- UDAP violations under the Federal Trade Commission Act, and
- State laws, including state UDAAP laws, identified in an appendix to the rule.
Comments on the Proposed Rule are due to the CFPB by February 10, 2023.
A copy of the CFPB’s proposed rule is available here: https://www.consumerfinance.gov/rules-policy/rules-under-development/registry-of-nonbank-covered-persons-subject-to-agency-court-orders/