CFPB proposes public registry of nonbank offenders of consumer financial protections, one aim being to ID repeat offenders

Nonbank financial firms that become subject to local, state, or federal consumer financial protection agency or court orders under laws enforceable by the federal Consumer Financial Protection Bureau (CFPB) would be required to register with the agency and, in some cases, provide attestations as to compliance with such orders under a bureau proposed rule announced Monday.

The proposed rule would require submission of information about the entity and the applicable order, including a copy of the order, to the public registry, the agency said. It would also require certain supervised nonbanks to submit annual written statements regarding compliance with each underlying order, signed by an attesting executive who has knowledge of the entity’s relevant systems and procedures for achieving compliance and control over the entity’s compliance efforts. Covered orders under this proposal would include only orders that are public and final, the agency said.

The bureau proposes to publish the orders and company information via an online registry. Larger companies subject to the CFPB’s supervisory authority, it said, would be required to designate an individual to attest whether the firm is adhering to registered law enforcement orders.

The proposal includes an exclusion for an entity with annual receipts of $1 million or less.

The bureau said its proposed rule would further the agency’s market monitoring capabilities as discussed in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).

“The CFPB’s proposed rule would help the agency identify and mitigate risks to American households and ensure that supervised companies perform their obligations to consumers,” it said in Monday’s release.

The bureau said that under its proposal:

  • Covered nonbanks would report certain agency and court orders connected to consumer financial products and services: Generally, nonbanks would have 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.
  • Larger supervised nonbanks would designate a senior executive to attest regarding the firm’s compliance with covered orders: Larger nonbanks that are supervised by the CFPB would be required to designate a senior executive to submit an annual supervisory written statement attesting to the steps taken to oversee the activities subject to the order and whether the executive knows of any violations of, or other instances of noncompliance with, the covered order. (This person would also be identified in the registry.)

In addition to publishing information about the agency or court order, the CFPB is considering publication of certain registration information about the company via release on the CFPB’s publicly available website.

Out for a 60-day comment period following its publication in the Federal Register, the proposal follows an announcement through a recent Supervisory Highlights report that the bureau had established a Repeat Offender Unit that to review, monitor, and identify ways to reduce repeat offenses by firms.

This proposal provides exclusions for insured depository institutions, insured credit unions, related persons, states, certain other entities, and natural persons. But the bureau’s notice of proposed rule states that it’s possible some of those entities could be targeted at some future time.

“While the CFPB might later consider collecting or publishing the information described in the proposal from insured banks and credit unions, there is currently greater need to collect this information from nonbanks under its jurisdiction,” the bureau wrote. “Among other things, the identity and size of all insured banks and credit unions are known to the CFPB. Also, there are only four federal prudential regulators for insured banks and credit unions, and they regularly publish their consumer financial protection orders. In contrast, comprehensive, readily accessible information is lacking about the identity of orders issued against nonbanks subject either to the CFPB’s market monitoring authority or to its supervisory authority across the various markets for consumer financial products and services.”

CFPB Proposes Registry to Detect Repeat Offenders

Notice for Federal Register