The Consumer Financial Protection Bureau is proposing to adopt a new standard that it says will bring more uniformity to its supervision of nonbanks.
The Consumer Financial Protection Act authorizes the bureau to supervise nonbanks if it has reasonable cause to determine that the financial products or services a nonbank offers pose “risks to consumers.” Under this authority, the bureau has designated nonbanks for supervision on a case-by-case basis. The proposed rule would define “risks to consumers” as conduct that presents “a high likelihood of significant harm” to consumers and is directly connected to the offering or provision of a consumer financial product or service as defined by the CFPA.”
“In the bureau’s preliminary view, Congress would not have expected it to expend its supervisory resources on issues that are speculative in likelihood or trivial in impact,” according to the proposed rule. “Although some prior orders have adopted a broad approach to the phrase ‘risks to consumers’ under [the CFPA], asserting that it can include even immaterial potential harms, the bureau proposes to reconsider this approach.”
The CFPB added that “it is essential that the bureau focus only on the specific categories of products and services that Congress charged the bureau with overseeing.
The CFPB will accept public comment on the rule for 30 days after publication in the Federal Register.
