The Consumer Financial Protection Bureau (CFPB) has proposed a rule to establish a public registry of nonbank financial firms’ terms and conditions. The CFPB states that, in some cases, consumer rights are limited or waived, or terms are misleading. The CFPB states that non-banks would need to submit information on terms and conditions in form contracts they use that seek to waive or limit individuals’ rights and other legal protections. The information would be made publicly available.
CFPB Director Rohit Chopra commented that some firms seek to strip consumers of their rights with the fine print.
“The CFPB is proposing a registry of these contract clauses to find out where people are unable to speak up when they’ve been harmed.”
The incoming Chairman of the House Financial Services Committee, Patrick McHenry, has issued a statement in response to the CFPB’s push to mandate the registration of nonbank financial firms.
McHenry stated:
“This is another attempt by Director Chopra to unilaterally expand the CFPB’s authority beyond Congress’ intent and to mandate what Democrats were unable to legislate. This proposed registry of terms and conditions will facilitate the naming and shaming of firms to empower progressive activists. Requiring nonbank financial firms to register publicly with the Bureau is unprecedented—no other industry is required to make public such detailed contract information. The days of Congress giving Director Chopra a free pass for his reckless actions have come to an end. Committee Republicans will finally ensure Director Chopra and the CFPB are held accountable.”
Impacted firms include payday lending, private student loan origination, and mortgage lending and servicing, auto financing, international remittances, and more.
The CFPB’s proposed rule aims to collect information on terms and conditions that may limit consumer rights as well seeking to boost market transparency. Typically, all terms of services outline user requirements and limit firms’ liability. Few consumers probably ever read these terms. The CFPB did not indicate what initiated the move to propose the new registry and whether or not there was consumer demand for this type of service.
The proposed rule shadows a proposed rule from December 2022, where the CFPB is seeking to establish a registry of nonbank financial institutions to detect repeat offenders.
The proposal is accepting public comments for 60 days and is viewable here.
