Procedures for designating a nonbank for supervision by the federal consumer financial protection agency were updated Tuesday, the agency said, and will streamline the process for both it and the nonbanks.
The Consumer Financial Protection Bureau (CFPB) said the final, procedural rule was issued to conform to a recent organizational change at the agency and to “further ensure that proceedings are fair, effective, and efficient for all parties.” The agency also said the procedural rule was issued based on its own experience with the first round of supervisory designation proceedings, which began in 2023.
The bureau noted that in 2013, it issued procedures to govern nonbank supervisory designation proceedings. However, it also pointed out that for many years, those procedures were “largely unused.” In 2022, the CFPB said it would begin to make active use of the supervisory designation authority.
In February, the agency said, it publicly released the first decision and order in a contested proceeding, which discusses the CFPB’s view of its authority.
“The CFPB examines financial institutions, including many nonbanks, for compliance with federal consumer financial protection law,” the agency said in a release. “The examinations can help identify issues before they become systemic or cause significant harm.”
The agency noted that its exams, as with other federal banking agencies, are confidential. It also pointed out that it publishes Supervisory Highlights which share summaries of exam findings without naming specific institutions.
Regarding its organization, the CFPB noted that also in February, it began a transition to a new structure for its supervision and enforcement work. In that layout, the agency said, the functions of the CFPB associate director of the agency’s division of supervision, enforcement, and fair lending were transferred to the supervision director as head of a division of supervision and the enforcement director as head of a division of enforcement.
The rule announced Tuesday, the CFPB said, “is in part intended to implement that change in the context of supervisory designation proceedings.”