State Regulators Ask CFPB to Reconsider Nonbank Repeat Offender Registry

The Conference of State Bank Supervisors (CSBS) recently submitted a Comment Letter to the CFPB, asking the Bureau to reconsider its proposed registry of covered nonbanks subject to public final orders related to violations of federal and state consumer protection laws (the Registry).  WBK previously covered the CFPB’s proposed rule here.  Note the letter was co-signed by the American Association of  Residential Mortgage Regulators, the National Association of Consumer Credit Administrators, the North American Collection Agency Regulatory Association, and the Money Transmitter Regulators Association (collectively with the CSBS, the “State Regulators”).

In the letter, the State Regulators urge the CFPB not to create the Registry, arguing that the Registry is misguided for various reasons, including:

• The Registry will be expansive, costly, and complex for covered nonbank entities, particularly small nonbank firms, and the CFPB itself states that it will have little impact on consumer behavior;
• The CFPB has not proven that nonbanks have a recidivism problem necessitating the Registry, and State Regulators effectively protect consumers from repeat offenders;
• By requiring attestations of compliance with state actions, the CFPB could ostensibly exercise supervisory and enforcement authority over laws for which the CFPB has not been granted such authority, and it could pose serious challenges to state supervision and enforcement efforts;
• A significant share of covered public enforcement actions are already reported by the State Regulators and the CFPB in the Nationwide Multistate Licensing System & Registry (NMLS), which makes the information available to the public through NMLS Consumer Access; and
• The proposed state laws that would be covered by the Registry do not provide a comprehensive view of state consumer protection efforts.

If the CFPB were to proceed with establishing the proposed Registry, the State Regulators recommend that the CFPB exempt nonbanks from the requirement of filing any public order that is already published on NMLS Consumer Access.  The State Regulators believe such an exemption would help minimize confusion in utilizing both NMLS Consumer Access and the Registry.