U.S. Agency to Oversee ‘Nonbanks’ Posing Risks to Consumers

The Consumer Financial Protection Bureau is proposing a rule that would set up procedures to supervise “nonbanks” that pose risks to consumers.
Nonbanks include firms such as mortgage lenders, mortgage servicers, payday lenders, consumer reporting agencies, debt collectors and money services companies.
Nonbanks are essentially non-depository businesses that provide consumer financial products or services – but do not have a bank, thrift or credit union charter.
The proposed rule would clarify CFPB procedures when exercising the authority granted the agency by the Dodd-Frank Wall Street reform laws.
“This is an important step in the development of our nonbank supervision program,” said CFPB Director Richard Cordray. “This proposal allows us to reach nonbanks that we would not otherwise supervise, while providing industry with a streamlined process that is fair and efficient.”
The proposed rule outlines the steps to notify a nonbank that it is being considered for supervision because the CFPB may have reasonable cause to determine that it poses risks to consumers.
The procedures would also give the nonbank a reasonable opportunity to respond.
The proposed rule, for example, explains what the CFPB requires in the notice and the response.
It says that nonbanks may respond not just in writing, but also orally. The proposal also creates a mechanism for nonbanks to file a petition to terminate supervision authority after two years.
The proposed rule is open for comments from the public for 60 days after it is published in the Federal Register.

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