The Consumer Financial Protection Bureau (CFPB) announced it will not prioritize enforcement or supervisory actions pursuant to its regulation requiring nonbank financial institutions caught violating the law to register with the bureau.
Per a CFPB press release, the new policy position applies to, but is not limited to, the April 14 and July 14 registration deadline for covered entities.
The CFPB added it intends to “instead continue to focus its enforcement and supervision activities on pressing threats to consumers” and is “further considering issuing a notice of proposed rulemaking to rescind the regulation or narrow its scope.”
The rule, titled “Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders,” was codified in July 2024, invoking the CFPB’s authority to supervise nonbank entities granted by the Dodd-Frank Act.
In addition to establishing a registry to track these nonbanks, the regulation also required entities to report consent orders and stipulated agreements relevant to legal claims against them.
Whereas traditional financial institutions are registered with state and federal regulators, others are not, the CFPB noted when the rule was finalized. Former CFPB Director Rohit Chopra characterized the nonbank registry as a means of supplementing existing registries that monitor for risks posed to consumers, such as the Nationwide Multistate Licensing System (NMLS).
The registration requirements were to be phased in gradually with different implementation dates based on an entity’s size and other factors, as described below:
- “(1) For a covered nonbank that is a larger participant of a market for consumer financial products or services described under 12 U.S.C. 5514(a)(1)(B) as defined by one or more rules issued by the bureau, 30 days after this subpart takes effect with respect to that covered nonbank;
- “(2) For a covered nonbank described under any other provision of 12 U.S.C. 5514(a)(1),
120 days after this subpart takes effect with respect to that covered nonbank; and
- “(3) For any other covered nonbank, 210 days after this subpart takes effect with respect to that covered nonbank.”
The CFPB’s announcement is similar to one the agency recently issued stating it would not prioritize enforcement of its payday lending rule and would consider reducing its scope.