The Association of Consumer Bankers sent a letter to Rohit Chopra, the new CFPB director, in which he urges the CFPB to adopt a broader participation rule for fintech consumer lenders.
Under the Dodd-Frank Act, in addition to the power to supervise non-bank entities in the residential mortgage, private student loan and payday loan markets, the CFPB has the power to supervise non-bank entities considered to be “A more important participant in a market for other consumers. financial products or services. The CFPB has used its broader participant authority to issue rules for consumer reporting, consumer debt collection, student loan servicing, and international money transfers.
In its letter, the CBA says a rule for the unsecured consumer loan market is appropriate because “unsupervised fintechs offer financial products and services to consumers in numbers that rival some of the largest supervised banks in the world. countries, but operate outside the oversight framework that allows the Bureau to monitor their activities and consumer harm. The ABC argues that unsupervised fintech lenders pose a “threat to consumers”.
However, if the CFPB were to adopt a broader participation rule for unsecured non-bank consumer lenders, such a rule is unlikely to target fintechs or online lenders. Such a rule would likely cover all unsecured consumer lenders, whether they operate online, in physical stores, or both.
Indeed, the CFPB has previously indicated in its semi-annual regulatory agendas that it is considering broader participation rules “in the markets for consumer installment loans and vehicle loans for surveillance purposes”. In the CFPB Spring 2018 Regulatory Agenda published under the direction of former interim director Mulvaney, the development of CFPB rules for larger participants has been designated “inactive”. The agenda stated that the name change was “not intended to signal a substantive decision on the merits of the projects”. CFPB’s fall 2021 regulatory agenda could shed light on whether the ‘new CFPB’ under the Biden administration plans to return this initiative to active status, and if so, what is its timeline. to go forward.