The Consumer Financial Protection Bureau announced last week that it is proposing a rule to supervise non-banks it deems as posing risk to consumers.
In addition to its supervision of certain types of financial companies, including all mortgage lenders, the Bureau is now ramping up efforts on the segment of companies it determines somehow pose a risk to consumers of financial products.
It may determine that risk based on previous activity or consumer complaints, as filed through the CFPB, the agency said.
“This is an important step in the development of our nonbank supervision program,” said CFPB Director Richard Cordray. “This proposal allows us to reach nonbanks that we would not otherwise supervise, while providing industry with a streamlined process that is fair and efficient.”
The change will not mean anything for mortgage lenders, which are already under the supervision, but it will go beyond taking a slice of an industry to target companies on an individual basis. Auto lenders, for example, could be deemed as subjecting consumers to risk and therefore falling under CFPB enforcement.
“It isn’t just that they have this authority,” said Chris Willis, partner with Ballard Spahr LLP. “They are signaling by releasing this rule that they will begin to use this authority. In an exam sense, they will be able to examine a company that isn’t one they already supervise.”
Written by Elizabeth Ecker