Consumer groups and industry trade associations are urging the Consumer Financial Protection Bureau not to scale back its supervisory authority over nonbanks — but for very different reasons.
Why it matters: The CFPB is weighing changes that could significantly reduce the number of debt collectors, auto finance companies, credit reporting agencies, and money transmitters subject to examination. Advocates warn the move would weaken consumer protections, while banks stress that limiting the Bureau’s flexibility could create regulatory blind spots.
The consumer side:
- Thirty-one advocacy organizations, led by the National Consumer Law Center (NCLC) and Consumer Federation of America (CFA), filed comments opposing the CFPB’s advanced notice of proposed rulemaking (ANPRs).
- They argue reducing supervision would slash coverage from thousands of debt collectors to as few as 11, and from dozens of auto lenders and credit bureaus to just a handful.
- Their concern: shrinking the pool of supervised companies would allow harmful practices — especially in subprime auto lending, debt collection, and credit reporting — to go unchecked.
- “The vast majority of complaints to the CFPB are about credit reporting and debt collection,” said Lauren Saunders of NCLC. “Limiting the CFPB’s ability to examine larger companies … makes no sense.”
The banking side:
- In a joint letter, the American Bankers Association (ABA) and Consumer Bankers Association (CBA) cautioned the CFPB against defining “risks to consumers” too narrowly in its supervisory designation proceedings.
- Banks stressed that the CFPB is the only federal regulator able to supervise nonbanks, which now play a central role in consumer finance, from mortgage lending to digital payments.
- Restricting the Bureau’s flexible, risk-based authority, they warned, could allow harmful practices to slip through — undermining Congress’s intent in the Dodd-Frank Act.
The big picture:
- Both sides agree that scaling back CFPB oversight could expose consumers to greater harm.
- Advocates want to keep broader definitions to ensure nonbanks of varying sizes remain examinable, while banks want to preserve the Bureau’s discretion to move quickly when consumer risks arise.
Read the comment from consumer advocates. Read the comment from banking trade groups
