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The Consumer Financial Protection Bureau on Wednesday released the procedures it will begin using Sept. 30 in its examinations of consumer reporting agencies whose annual receipts exceed $7 million.

The CFPB will perform examinations of 30 out of an estimated 400 consumer reporting agencies, the bureau said. Those 30 firms represent about 94 percent of the market's annual receipts. Under the Dodd-Frank Act, the bureau has the authority to supervise "larger market participants" that provide consumer financial services but are non-federally supervised.

The procedures show that CFPB examiners will be seeking to verify that consumer reporting agencies are complying with federal consumer financial law requirements. To that end, examiners will:

• assess whether companies have reasonable procedures in place to ensure the accuracy of the information they have about consumers;
• determine if reporting companies are conducting reasonable investigations when consumers dispute the accuracy or completeness of their files;
• examine whether reporting companies disclose to consumers the information they have about them, including credit scores;and
• determine whether these companies are taking adequate measures to address identity theft and protect active-duty military consumers from fraud.

The procedures are an extension of the CFPB's general supervisory and examination manual. The agency says the examination process will include pre-examination scoping and review of information, data analysis, on-site examinations, regular communication with supervised entities and follow-up monitoring.

More specifically, the CFPB plans to examine the quality of the regulated entity's compliance management systems, review practices to ensure they comply with federal consumer financial law and identify risks to consumers throughout the consumer reporting process. Examiners will coordinate with the CFPB's enforcement staff when necessary to take appropriate enforcement actions, the bureau said.

The CFPB has issued similar procedures for other companies under its supervision, such as mortgage originators, mortgage servicers and payday lenders.

Last summer, the CFPB sought input on how it should determine what is a "larger market participant." NAFCU 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.

While NAFCU is pleased the CFPB is moving forward in its supervision of nonbank entities, the association continues to be concerned about the breadth and scope of that supervision, which appears to exceed what is permissible under the Dodd-Frank Act.