Newsroom

February 16, 2012

Bureau targets debt collectors, reporting agencies

The Consumer Financial Protection Bureau on Thursday released a proposed rule on supervision of "large participants" in the consumer debt collection and consumer reporting markets, and more such proposals affecting nonbank providers are yet to come.

The proposal, out for a 60-day comment period, is the CFPB's first proposed rule addressing federal supervision of nonbank providers that are not explicitly enumerated in the Dodd-Frank Act.

The law gives the CFPB supervisory and enforcement authority over banks and credit unions with more than $10 billion in assets and nonbank participants in residential mortgage, payday lending and private student lending markets. It also gives the agency authority to supervise "larger participants" of other consumer financial services markets. The CFPB has until July 21, 2012, to define such participants in an initial rule.

Last summer, the CFPB sought input on how it should determine what is a "larger market participant." NAFCU, in an official comment, urged the CFPB to look at the full range of service providers and to define "larger" participants using criteria such as size, market share and number of specific product markets serviced by such entities. It also urged against setting a single threshold across all markets in determining what is a larger market participant.

It appears the CFPB, for now, is taking such an approach. The proposed rule would apply to consumer debt collectors with more than $10 million in annual receipts and consumer reporting agencies with more than $7 million in annual receipts. The CFPB estimates this includes about 175 debt collection firms and 30 consumer reporting agencies. That translates to 4 percent of debt collection firms, which garner 63 percent of annual receipts from debt collection activities; and 7 percent of consumer reporting firms, which garner 94 percent of annual receipts from consumer reporting activities.

This will be the first time that nonbank debt collection and consumer reporting concerns have been made subject to federal supervision, the bureau said. It says it will choose "the best criteria and the appropriate thresholds" for each market it adds.

Comments will be due 60 days following publication in the Federal Register. NAFCU is preparing a Regulatory Alert for its members.