Changes in the tests for defining larger participants in the auto financing, consumer debt collection, consumer reporting, and international money transfer markets are contemplated in four advance notices of proposed rulemaking (ANPRs) from the Consumer Financial Protection Bureau (CFPB).
Nonbank “covered persons” in the above four areas that meet certain thresholds are subject to CFPB supervision as permitted under the Consumer Financial Protection Act (CFPA). In each case, the bureau says the benefits of the current threshold may not justify the compliance burden and may be diverting bureau resources:
Auto financing: The CFPB says its current regulation treats an entity as a larger participant of the automobile financing market if it has at least 10,000 aggregate annual originations. It offers three examples of how this threshold might be revised – the largest increase among them being to 1.05 million aggregate annual originations. This change, it says, would reduce the number of covered entities from 63 (accounting for an estimated 94% of market activity) to five (accounting for an estimated 42% of same).
Consumer debt collection: The bureau’s 2012 final rule treats firms with more than $10 million in annual receipts from consumer debt collection activities as larger market participants. At the time, the bureau estimated this would cover about 4% of debt collectors, or about 175 out of 4,500 entities engaged in debt collection. It notes, among other things, that since that time the market has consolidated “significantly” to about 2,500 to 3,000 entities (based on 2022 data, the most recent available), with about 200 to 250 (7% to 10%) having annual receipts exceeding $10 million. It details a couple of impacts should the threshold be raised to $50 million or $100 million.
Consumer reporting: The bureau said its current regulation defines a larger market participant having more than $7 million in annual receipts from relevant consumer reporting activities. However, it points to 2022 data sources showing that, based on the first source, the 10 firms with $100 million or more in revenue accounted for about 70% of total revenue in the market; and based on the second, that the 23 firms with $100 million or more in revenue accounted for about 95% of the market.
International money transfer: The bureau’s 2014 rule deemed nonbank covered persons with at least 1 million aggregate annual international money transfers as larger market participants. It says its analysis of data collected by state regulators from the fourth quarter of 2023 through the third quarter of 2024 showed about 28 nonbank covered persons currently meet the rule’s test and provide an estimated 98% of transfers. It estimates that if the bureau raised the threshold to 10 million transfers per year, about 15 nonbank covered persons providing about 94% of such transfers would qualify as larger participants. It said raising the threshold to 30 million transfers would leave 8 eight entities (providing about 77% of such transfers) covered; and that raising it to 50 million would leave 4 entities (providing about 61% of all such transfers) covered.
Comments are due Sept. 22 on all four ANPRs, which were published Friday in the Federal Register.
F.R. notices:
Defining Larger Participants of the Automobile Financing Market
Defining Larger Participants of the Consumer Debt Collection Market
Defining Larger Participants of the Consumer Reporting Market
Defining Larger Participants of the International Money Transfer Market
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