Newsroom

January 05, 2012

Non-regulated providers to feel greatest impact

The president's appointment of Richard Cordray as director of the CFPB is getting mixed reviews among members of Congress and within the financial industry, but one thing is pretty clear: the parties most affected by this development are non-federally regulated, non-depository providers.

The CFPB has had authority since July 2011 to carry out supervision under pre-existing consumer financial services rules affecting depository institutions, and it is collecting comments on mortgage disclosure prototype forms that will be addressed in a proposed rule soon. But until now, the CFPB has been unable to take any supervisory action or regulatory action affecting non-depository providers.

Cordray, writing on The Huffington Post, said the CFPB would provide more information in coming weeks on how it plans to do that.

NAFCU Director of Regulatory Compliance Steve Van Beek has pulled together a summary of the CFPB's powers regarding these providers, which have generally escaped federal oversight until now. These powers include:

  • the ability to write regulations identifying unfair, deceptive or abusive acts or practices by any party offering a consumer financial product or service;
  • the ability to write regulations to ensure full, accurate and effective disclosures – both intitially and over the term of the product or service – for any consumer financial product or service;
  • the ability to adopt model disclosures for any financial product or service;
  • the power to examine and supervise nondepository institutions who originate or service mortgage loans, offer private education loans or offer payday loans; and
  • the power to determine which entities are larger participants in markets for other consumer financial products and, thus, subject to the supervision and examination.

Van Beek addresses these in today's entry on the NAFCU Compliance Blog.