The CFPB announced it is invoking a largely unused legal provision to examine nonbank financial companies that pose risks to consumers. The CFPB believes that utilizing this dormant authority will help protect consumers and level the playing field between banks and nonbanks. The CFPB is also seeking public comments on proposed amendments to its procedural rules to make this process more transparent. Comments on the proposal will be accepted for 30 days following Federal Register publication.
Nonbanks (including fintechs) whose activities the CFPB has reasonable cause to determine pose risks to consumers are entities subject to CFPB supervision under the Consumer Financial Protection Act. For example, activities of some nonbank entities may involve potentially unfair, deceptive, or abusive acts or practices, or other acts or practices that potentially violate federal consumer financial law. The CFPB may base such reasonable cause determinations on complaints collected by the CFPB, or on information from other sources, such as judicial opinions and administrative decisions. The CFPB may also learn of such risks through whistleblower complaints, state partners, federal partners, or news reports.
Sign up to the receive the weekly InfoSight eNewsletter email. Existing subscribers can manage their subscription.