CFPB Issues New Rule Supervising Nonbanks

The Consumer Financial Protection Bureau (“CFPB”) has issued a final rule, outlining new procedures for establishing supervisory authority over nonbanks. The rule provides substantial latitude to the agency and extends its ability to regulate the previously unregulated. According to the CFPB, the final rule was not required but was issued to provide transparency regarding the CFPB's procedures. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), the CFPB is charged to supervise any nonbank, regardless of its size, whose activities the CFPB has reasonable cause to determine pose risks to consumers. The agency is authorized to evaluate compliance with the requirements of federal consumer financial law by obtaining information about the activities and compliance systems or procedures of such nonbanks.