The CFPB on July 21, 2025, withdrew a direct final rule that would have "rescinded procedures by which a State official must notify the Bureau when the official takes an action to enforce the Consumer Financial Protection Act."
As previously reported by Holland & Knight, the notification rules established by Section 1042(B) of the Consumer Financial Protection Act (CFPA) require state attorneys general and other regulators to provide the CFPB 10 days' notice before initiating any action against a covered person. The notice must include details regarding affected parties, the factual background and a copy of the complaint. The direct final rule would have eliminated these requirements, as the CFPB believed the same requirements and guidelines were embedded within the statute. Though this direct final rule was published on May 21, 2025, the CFPB has now withdrawn the rule after receiving significant adverse comments, leaving the notification procedures as they were originally written.
While the CFPB was concerned about increased regulation and compliance costs without seemingly any notable benefit, consumer and industry groups were concerned about the rule's impact on consistent enforcement of industry regulations, as well as preventing duplicative litigation.
Though the CFPB continues its independent efforts to identify areas where the agency exceeds its rulemaking authority or imposes unduly burdensome compliance regulations, this withdrawal highlights the impact that industry participants can have on ultimate outcomes. As the CFPB seeks comments on several new proposals, it is clear that industry input can be highly impactful on the agency's policy agenda, initiatives and rulemaking process.
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