CFPB Adopts Final Rule Implementing Registry for Nonbanks Subject to Agency and Court Orders

The CFPB recently published a final rule, creating a registry of nonbank covered person entities subject to certain public final orders related to violations of certain consumer protection laws arising out of conduct in connection with the offering or provision of a consumer financial product or service.  The rule also makes certain registry information public and requires certain nonbanks to submit annual written statements, signed by an attesting senior executive, regarding the entity’s compliance with such covered orders.

The final rule is largely unchanged from the proposed rule, and requires any covered nonbank that is identified by name as a party subject to a covered order with an effective date on or after (or that remains in effect as of) the effective date of the rule to register with the newly established nonbank registration (NBR) system and provide and update certain information by submitting filings to the CFPB. The effective date of the final rule is September 16, 2024.

The final rule creates three tiers of 90-day implementation periods.  By the end of the period, institutions must register covered orders with effective dates between January 1, 2017, and the institution’s implementation date, which is the first day of the implementation period.  However, covered orders issued prior to September 16, 2024, must be registered only if the covered order is still in effect as of September 16, 2024.  Covered orders issued after the institution’s implementation date must be reported within 90 days of the covered order’s effective date.

The implementation periods are as follows:

• Larger Participant CFPB-Supervised Covered Nonbanks:  October 16, 2024, through January 14, 2025;
• Other CFPB-Supervised Covered Nonbanks:  January 14, 2025, through April 15, 2025; and
• All Other Covered Nonbanks:  April 14, 2025, through July 14, 2025.

Written statements from the attesting senior executive regarding the entity’s compliance with the reported covered orders must be submitted annually.  The written statement requirement is only applicable to covered orders with an effective date on or after the applicable nonbank registry implementation date.  The written statement requirement does not apply to covered orders in effect prior to that date.

The attesting senior executive must be the entity’s highest-ranking duly appointed senior executive officer whose assigned duties include ensuring the supervised registered entity’s compliance with federal consumer financial law, and who has both: (i) knowledge of the entity’s systems and procedures for achieving compliance with the covered order, and (ii) control over the entity’s efforts to comply with the covered order.  The executive must describe the steps the executive has taken to review the entity’s activities subject to the covered order during the previous calendar year, and attest as to whether, to the executive’s knowledge, the entity identified any violations or noncompliance with the obligations in the covered order’s public provisions.