The Consumer Financial Protection Bureau (“CFPB”) recently issued its final rule that establishes procedures to bring under its supervisory authority nonbanks whose activities it has reasonable cause to determine pose risks to consumers. Nonbanks subject to the rule are companies that offer or provide consumer financial products or services but do not have a bank, thrift, or credit union charter. As a result, providers of financial advisory services, credit counseling, debt management plans, debt settlement, and money transmission services, and their service providers, may be subject to supervision and examination if certain criteria are met. The rule takes effect on August 2, 2013.
The CFPB’s Expansive Supervisory Authority -
The CFPB claims under the Dodd-Frank Act that it has broad authority to prescribe rules to supervise nonbanks that otherwise fall under its jurisdiction. The final rule includes procedures the CFPB will use to notify a nonbank that it is being considered for supervision because the CFPB may have “reasonable cause to determine that it poses a risk to consumers.” The rule also sets out the procedures that the CFPB will follow to give the nonbank in question a reasonable opportunity to respond to such notice.
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Topics: CFPB, Creditors, Debt, Dodd-Frank, Financial Products, Lenders, Nonbank Firms, SEC
Published In: General Business Updates, Consumer Protection Updates, Finance & Banking Updates
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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