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April 4, 2013 – NAFCU is publishing a Regulatory Alert online today to seek members' input on a CFPB proposal on the supervision of nonbank student loan servicers.

The Dodd-Frank Act authorized the CFPB to define larger participants of the debt collection, credit reporting and student loan servicing markets. The CFPB has completed rules for the first two groups. The CFPB is accepting comments on its proposal for designating large nonbank student loan servicers for bureau oversight until May 28.

As it has with debt collection and credit reporting firms, the CFPB is proposing to define large market participants in the student loan servicing market based on account volume. The proposed rule defines a servicer as a larger market participant if its account volume exceeded 1 million at the end of the previous calendar year.

NAFCU supports placing previously non-regulated, nonbank consumer service providers under CFPB oversight. (General concerns about regulatory burdens aside, NAFCU's key issue with the bureau is that credit unions, which didn't contribute to the financial crisis, should not be subject to direct CFPB oversight, no matter their asset size.)

NAFCU has urged that in designating nonbank firms for oversight, the CFPB look at the full range of 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.

• Proposed rule
• NAFCU comments on supervision of nonbank larger market participants