The Consumer Financial Protection Bureau yesterday issued a final rule updating its processes for how it identifies and designates non-banks for supervision. The rule was issued as a result of organizational changes at the Bureau, the CFPB said.
The CFPB has been empowered since its inception with the authority to supervise nonbanks that are offering consumer financial products or services. Admitting that it largely opted not to act on that authority for a long time, the Bureau in 2022 announced it would begin to use this supervision authority and established a process for how it would do so.
Earlier this year, the CFPB decided to split the functions of the Associate Director of the Division of Supervision, Enforcement, and Fair Lending into two positions — the Supervision Director and the Enforcement Director. The Bureau also created a Division of Supervision and the Division of Enforcement. The rule the CFPB announced yesterday is intended to reconcile the organizational changes. For example, the Associate Director of the Division of Supervision, Enforcement, and Fair Lending used to make recommendations to the CFPB’s Director regarding the final determination that needed to be made, but that position no longer exists.
The CFPB noted that “there is a large population of firms potentially subject to this rule,” and estimated that there are 154,430 entities in the industries that the Bureau covers. It noted that it has exercised its supervisory authority in less than 12 cases since 2013.
Previously, companies could consent to being supervised for period of two years, which will no longer be mandated.
