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CFPB proposes rule to establish non-bank supervision framework

Richard Cordray

The Consumer Financial Protection Bureau proposed a rule on Thursday that would establish procedures to supervise non-bank entities that may engage in activities that pose risks to American consumers.

“This is an important step in the development of our non-bank supervision program,” CFPB Director Richard Cordray said. “This proposal allows us to reach non-banks that we would not otherwise supervise, while providing industry with a streamlined process that is fair and efficient.”

Non-bank companies include debt collectors, mortgage servicers, payday lenders, mortgage lenders, money services firms and consumer credit reporting agencies. Under the 2010 Dodd-Frank Act, the CFPB was granted the authority to oversee any non-bank entity that the watchdog agency deems risky to the American public.

The proposed rule would establish and clarify procedures to inform a non-bank company that it is being considered for increased oversight by the CFPB, including the information that would be required in the notice to and response by the non-bank firm. The proposal would further set out a procedure that would enable non-bank entities to file a petition to terminate oversight authority after two years.

If the agency does notify a non-bank company, it will mean that the agency may be supervising it. The CFPB does have the authority to conduct examinations of and request reports from those non-bank companies under supervision.

The rule proposal will be available for public comment for 60 days following its publication in the Federal Register.

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