CFPB Proposes Rule for Supervising Nonbanks Posing Risks to Consumers

CFPB

On May 24, the CFPB announced a proposed rule outlining procedures for establishing supervisory authority over nonbanks that it has “reasonable cause” to believe pose risks to consumers. According to the proposed rule, the CFPB’s determination regarding whether and when to issue a “Notice of Reasonable Cause” will be based on complaints “collected by the Bureau” or on information from “other sources.” The proposed rule outlines the procedures by which the CFPB will notify nonbanks that they are being considered for supervision and how they can respond to the CFPB’s notice. Once a nonbank is subject to supervision, it can petition to end the supervision after two years and annually thereafter, unless the CFPB and the nonbank agree to a longer term. Once supervised, the nonbank is also subject to the CFPB’s authority to require reports and conduct examinations. The comment period will be open for 60 days after the proposed rule is published in the Federal Register.