Tuesday, May 29, 2012
The Consumer Financial Protection Bureau proposed a rule that sets up procedures for how it would go about informing a nonbank entity that it is under scrutiny by the agency for potential consumer abuses. "This proposal allows us to reach nonbanks that we would not otherwise supervise, while providing industry with a streamlined process that is fair and efficient," said Richard Cordray, Director of the CFPB.
The CFPB noted that the procedures would include how to notify a nonbank that it is being considered for supervision and provide the nonbank with a "reasonable opportunity" to respond to the notice. The proposal would also create a mechanism for nonbanks to file petitions to terminate the CFPB's supervision of them. The nonbanks would be able to file these petitions two years after the CFPB instituted oversight of them.
The CFPB added that a supervision notification may offer no further information than that the nonbank may be supervised, and that, part of its supervisory mandate, it can require reports from nonbanks and conduct audits of nonbanks.
Under the Dodd-Frank Act of 2010, the CFPB was granted the authority to supervise the business practices of nonbanks, such as payday lenders and prepaid card companies, if they receive consumer complaints or other information. The proposed rule is available online at www.consumerfinance.gov/notice-and-comment/ .
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