Today, the CFPB proposed a rule setting up procedures for supervising non-banks that the CFPB believes are engaging in, or may have engaged in, activities that pose risks to consumers. Under the Dodd-Frank Act, the CFPB has authority to supervise any nonbank that it has reasonable cause to determine is engaging in, or has engaged, in conduct that poses risks to consumers with regard to the offering or provision of consumer financial products or services based on complaints and any other information it receives.
The proposed rule sets forth a series of specific procedures by which the CFPB will notify a nonbank that it is being considered for supervision. The proposed rule also provides the nonbank with an opportunity to submit a sworn written response, as well as the right to submit an additional oral response, should the nonbank so choose. Moreover, the proposed rule creates a mechanism for nonbanks to file a petition to terminate supervision authority after two years, which will be decided at the discretion of the CFPB, as well as two procedures for a nonbank to voluntarily consent to CFPB supervision.
In the proposed rule, the CFPB states that it “believes that the procedures established by this [p]roposed [r]ule would provide a recipient of a [n]otice with a more robust process than required by [Dodd Frank].” The proposed rule further states that a notice of reasonable cause to supervise to a nonbank will not constitute a notice of charges for any alleged violation of the federal consumer laws. Comments on the proposed rule will be due 60 days after it is published in the Federal Register. We are preparing a detailed legal alert that will give more detail on the specific procedures being proposed by the CFPB for this process and will provide a link to the alert in a subsequent blog post.