.png)
.png)
The Consumer Financial Protection Bureau (CFPB) has taken further steps to expand its supervisory authority over nonbank financial companies by adopting a procedural rule aimed at streamlining the designation process. This move comes shortly after the agency announced its first case where it asserted oversight authority over a firm that did not consent to supervision. The CFPB emphasized its commitment to establishing productive supervisory relationships with all institutions falling under its purview, including those that have consented to supervision.
The newly adopted rule is in line with the CFPB's transition to a new organizational structure for its supervision and enforcement activities, which will impact the procedures for supervisory designation proceedings. Under the updated process, a CFPB supervision director will initiate proceedings by issuing a notice of reasonable cause. While the rule simplifies the requirements for such notices, it does not alter the rights of nonbank covered entities to respond.
In explaining the rationale behind the rule, the CFPB stated, "The bureau believes the reduction in time and general streamlining of the decisional process will benefit nonbank covered entities by improving the efficiency of this rule’s application." The rule is set to become effective upon its publication in the Federal Register.
This development underscores the CFPB's ongoing efforts to strengthen its oversight of nonbank financial entities, aiming to enhance consumer protection and ensure compliance with relevant regulations. By streamlining the designation process, the CFPB seeks to improve efficiency and effectiveness in its supervisory activities, ultimately contributing to a more robust regulatory framework in the financial industry.
By fLEXI tEAM