The Consumer Financial Protection Bureau (CFPB) announced on Monday that they will invoke a dormant authority to examine nonbank companies that pose risks to consumers.
“Given the rapid growth of consumer offerings by nonbanks, the CFPB is now utilizing a dormant authority to hold nonbanks to the same standards that banks are held to,” said CFPB Director Rohit Chopra. “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 expressed that utilizing this authority will protect consumers and provide fair conditions between banks and nonbanks. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the CFPB has authority to examine companies that may pose risk to consumers.
“Nonbanks do not have a bank, thrift, or credit union charter; many today operate nationally and brand themselves as ‘fintechs’,” said the CFPB.
CUNA has previously expressed concern that the exponential growth of some nonbank entities has outpaced prudent regulatory oversight and could ultimately result in consumer harm.
The Bureau will accept comments on the procedural rule for 30 days after publication in the Federal Register.