CFPB Amends Non-Bank Supervisory Designation Procedures

The CFPB amended its procedures for designating non-bank entities which are subject to supervision.

The CFPB has the authority to designate non-bank entities for supervision if they are engaged in conduct that poses risks to consumers regarding the offering or provision of consumer financial products or services.  In turn, entities have the right to challenge this designation.  The amendments are designed to update the CFPB’s existing rules governing the exercise of this power.

Among other changes, the amendments: 1) consolidate procedures on entering into consent agreements whereby an entity agrees to accept the CFPB’s supervision designation instead of contesting it; 2) clarify that these consent agreements are not subject to the public release process, unlike final decisions and order of the agency; 3) allow the CFPB to determine the duration of the supervision designation on a case-by-case basis, as opposed to requiring two year terms; 4) amend the applicable procedures, briefing practices, and appeal requirements for when an entity contests the designation; 5) address notices and proceedings which designate multiple entities; and 6) make other changes to reflect recent agency reorganizations and the creation of new executive positions in the agency.

The amendment became effective April 23, 2024, and the CFPB will accept comments about the amendment until May 23, 2024.