CFPB Aims to Rescind Regulation Requiring Registry of Consumer Law-Breaking Nonbank Financial Companies

The Consumer Financial Protection Bureau (CFPB) is proposing to rescind the “NBR Rule” it adopted last summer that established a registry of nonbank financial companies that have broken consumer laws and are subject to federal, state or local government or court orders.

The CFPB said in a proposed recindment that it filed with the Federal Register on Tuesday (May 13) at 8:45 a.m. that it is seeking comments on the proposal, including analysis of the rule’s costs and benefits.

“The Bureau is proposing to rescind the NBR Rule based upon concern that the costs the rule imposes on regulated entities, and which may in large part be passed onto consumers, are not justified by the speculative and unquantified benefits to consumers discussed in the analysis proffered in the NRB Rule,” CFPB Acting Director Russell Vought wrote in the proposed recission.

Vought added that the “significant regulatory burden” imposed by the rule has been noted by not only the regulated entities but also the Small Business Administration’s Office of Advocacy and the Conference of State Bank Supervisors.

He also wrote in the proposed recission that the CFPB believes the rule is not necessary because Congress has authorized several federal and state agencies to enforce federal consumer laws.

When the CFPB issued the final rule creating the registry in June, the agency said the registry is meant to help law enforcement across the United States identify and stop repeat offenders.

The agency added that before the establishment of the registry, orders were publicly available but were not tracked. Unlike banks, credit unions and many mortgage companies, many other types of financial institutions are not licensed or registered.

“Throughout our economy, we have seen fraudsters and scam artists get caught in one part of the country and restart their scheme in a new place hoping to not get caught again,” Rohit Chopra, who was director of the CFPB at the time, said when announcing the final rule.

The CFPB said in April that it will not prioritize enforcement of the regulation and “will instead continue to focus its enforcement and supervision activities on pressing threats to consumers.”