Last week, the Consumer Finance Protection Bureau (CFPB) issued a statement asking for public comment on regulation for nonbanks, which includes entities such as debt collection agencies, consumer credit agencies and debt relief services.
While the federal government has long issued legislation and regulations for traditional banking sectors, the CFPB will now have jurisdiction and power to issue reforms for non-traditional banking organizations. Many anticipate that the CFPB will issue reforms, although possibly not right away.
This is a first step and indication that the agency does plan to analyze the industry and make changes. There is a requirement for the CFPB that in order to regulate certain organizations, it must be determined that they are “larger participants” in the greater market. For this reason, the agency is now seeking public comment on six specific markets: debt collection, consumer reporting, consumer credit and related activities, money transmitting, check cashing and related activities, prepaid cards, and debt relief services.
The primary aim for the CFPB is to protect consumer interests, specifically with regard to nonbank companies, and to expand its supervision among these businesses. As for payday lending companies, the CFPB has authority to regulate the entire industry, regardless of size, because the “larger participant” requirement does not apply to mortgage, payday lending, or private student lending markets.
To contribute your two cents, instructions for submitting comments are found here, including instructions for online submission.