Earlier this month, the CFPB issued four separate advance notices of proposed rulemaking with respect to rules that give the CFPB authority over nonbank companies in the auto finance, international money transfer, debt collection, and consumer credit reporting spaces. According to the CFPB, the current thresholds impose a compliance burden on small and midsize entities presently considered larger participants, and the CFPB’s regulatory authority over these entities strains the agency’s depleting resources. The proposed rules are intended to address those challenges.
With respect to the auto finance industry, the CFPB is considering three different threshold aggregate annual origination numbers, the highest being 1,050,000 loans which would result in only 5 nonbank entities qualifying as a larger participate. The current threshold (10,000 loans) was last set in 2015 and the CFPB is seeking comment as to “whether changes in the automobile financing market call for updating the test to define larger participants since it published the Automobile Financing Larger Participant Rule ten years ago.”
For entities in the international money transfer space, the CFPB is considering raising the threshold to qualify as a larger participant from $1 million in aggregate annual international money transfers to anywhere between $10 and $50 million. The CFPB noted that “the market for international money transfers provided by nonbank covered persons is heavily concentrated” and that “the largest eight non-depository financial institutions by transfer volume conducted approximately 77 percent of estimated remittance transfers.” This suggested to the CFPB that “a higher threshold might better balance the goals of protecting consumers while also not unnecessarily imposing costs on covered persons.”
The CFPB has proposed similarly-scaled jumps in the debt collection thresholds; proposing increases of 2.5x or 5x to the existing $10 million in revenue threshold.
As for consumer credit reporting, the CFPB has proposed raising the threshold to match the Small Business Administration’s $41 million in revenue threshold which the CFPB estimates would “leave at least six larger participants in the market.”
The proposals are consistent with the current administration’s efforts to narrow the scope of the CFPB’s supervisory authority and, if finalized, could result in a changing regulatory landscape for nonbank entities in those spaces.
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