The Consumer Financial Protection Bureau (CFPB) has proposed a new rule aimed at revising its supervisory authority over nonbank entities. The move comes under the Dodd-Frank Act, which gives the CFPB power to supervise companies it determines pose a “risk” to consumers. However, there has been no clear definition of what constitutes such risk.
In previous years, the CFPB’s criteria for labeling companies as “risky to consumers” were not clearly defined. This lack of clarity led to confusion in the marketplace and may have limited access to credit for some consumers. The prior administration issued a rulemaking that allowed these designations to be made public and exercised this authority for the first time.
In 2024, a bipartisan group of Members of Congress sent a letter to the CFPB expressing concerns about how nonbank supervision was being handled.
A spokesperson stated, "While the CFPB’s new, proposed rule brings important clarification, AFSA’s comment letter will emphasize the need to clarify that state-licensed and state-regulated products do not pose risk to consumers."
The newly proposed rule is seen by some as an important step toward correcting what they describe as regulatory overreach by the Bureau.