The Consumer Financial Protection Bureau yesterday announced the publication of a final rule that will create a registry aimed at detecting and deterring corporate offenders who have violated consumer protection laws. This registry will track companies subject to federal, state, or local government or court orders, helping to identify repeat offenders and trends in recidivism. This initiative is part of the CFPB’s broader effort to hold lawbreaking companies accountable and curb corporate recidivism.
CFPB Director Rohit Chopra emphasized the importance of this new rule, stating, “Too often, financial firms treat penalties for illegal activity as the cost of doing business. The CFPB’s new rule will help law enforcement across the country detect and stop repeat offenders.”
Key Aspects of the New Rule:
- Mandatory Registration: Nonbank financial companies that have violated consumer laws must register with the CFPB. This includes reporting final agency and court orders, such as consent and stipulated orders under consumer protection laws.
- Executive Attestation: For nonbank companies supervised by the CFPB, a senior executive must provide a written attestation confirming compliance with relevant orders.
- Simplified Filing Process: Companies with orders published on the NMLS Consumer Access website can use a simplified filing process. The registration requirements will be phased in on a rolling basis.
The 2008 financial crisis highlighted significant weaknesses in the oversight of nonbank financial companies, which have traditionally faced inconsistent regulation. In response, Congress passed the SAFE Act in 2008, requiring mortgage loan originators to be registered and licensed. However, many other types of financial companies remain unlicensed or unregistered.
The Consumer Financial Protection Act granted the CFPB the authority to register nonbanks, enhancing its ability to monitor risks posed by these entities to consumers. This new rule is the first to utilize this authority, supplementing existing registries like the NMLS by covering entities not subject to state and federal oversight.
For professionals in the credit and collection industry, this new rule signifies a significant shift towards greater transparency and accountability. The registry will serve as a critical tool for state attorneys general, regulators, and other law enforcement agencies to monitor and act against repeat offenders.
The CFPB has also established a Repeat Offender Unit, a national supervision team responsible for overseeing entities subject to CFPB law enforcement orders. This unit will ensure that companies, their senior management, and boards of directors do not treat these orders as mere suggestions.
