The Consumer Financial Protection Bureau (CFPB) says it will “examine” nonbank firms that “pose risks to consumers.”
The CFPB states that it is “invoking a largely unused legal provision” to pursue these investigations.
While the Bureau states that it will examine these firms it has also posted a Procedural rule; request for public comment. on the matter, stating:
“The Consumer Financial Protection Bureau (Bureau) is amending an aspect of procedures for establishing supervisory authority based on a risk determination. Specifically, the Bureau is adding a mechanism for the Bureau to make final decisions and orders in these proceedings public.”
Nonbank financial services can be Fintechs that provide online lending, as well as other bank like services. While these firms are regulated, it appears that the CFPB is aiming to expand its regulatory remit more directly.
CFPB Director Rohit Chopra said that given the rapid growth of nonbanks they will now hold these firms to “the same standards that banks are held to.”
“This authority gives us critical agility to move as quickly as the market, allowing us to conduct examinations of financial companies posing risks to consumers and stop harm before it spreads.”
The CFPB claims that under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, it has authority to use “traditional law enforcement to stop companies from engaging in conduct that pose risk to consumers” including litigation.
The CFPB adds that it also has the authority to conduct supervisory examinations to review the books and records of regulated entities.
The CFPB states that it is authorized to examine all nonbank entities in the mortgage, private student loan, payday loan industries, remittances and more.
The procedural rule posted today is said to be a move to “increase the transparency of the risk-determination process.”
The rulemaking is available here.