CFPB Proposes ‘Public Rap Sheet’ for Nonbank Financial Firms
A CFPB proposal aimed at regulating nonbank financial firms may find support from both credit union and banking trade groups. Learn why.
Bureau rolls out proposal aimed at regulating institutions often criticized by both credit union and banking groups.
The CFPB on Monday proposed requiring nonbank financial firms to register with the agency when they are subject to consumer protection agency or court orders.
The registry, which one consumer advocate called a “public rap sheet for corporations,” would be made public.
Both credit union and banking trade groups often have criticized such firms, which they contend escape public scrutiny because they are not subject to rules issued by traditional financial regulators.
Agency officials left open the possibility that they could design a similar registry for banks and credit unions, but said it is more urgent to establish one for nonbanks that are not subject to banking and credit unions regulators.
“A public registry of agency and court orders issued or obtained in connection with violations of law would help the Bureau and the broader public monitor trends concerning corporate recidivism relating to consumer protection law,” the CFPB said, in announcing it is soliciting public comment on the proposal.
Inside the Proposal
In the 212-page document, the CFPB said nonbank financial firms may pose ongoing risks to consumers and that a public registry would shed light on how laws are being enforced across jurisdictions and markets, as well as help identify trends and possible gaps in enforcement.
Further, larger companies subject to the bureau’s supervisory authority would be required to designate a person to attest whether the company is adhering to registered enforcement orders.
“The proposed registry will help the CFPB, the law enforcement community, and the public limit the harms from repeat offenders,” agency director Rohit Chopra said, in presenting the proposal.
The registry would additionally require nonbanks to report “final agency and court orders and judgments, including consent and stipulated orders, brought under federal consumer financial protection laws or state laws regarding unfair, deceptive, or abusive acts or practices.”
Support From Consumer Group
A consumer advocacy group praised the effort.
“A public rap sheet for corporations is a welcome proposal,” said Bartlett Naylor, financial policy advocate for Public Citizen. “This not only would help law enforcers spot repeat offenders; the public would be able to look at a trusted registry to see if a particular company is worth the risk.”