April 16, 2024

CFPB: Supervision Designation Procedures for Nonbanks Updated

Procedural rule streamlines process for designating nonbanks for supervision

The Consumer Financial Protection Bureau (CFPB) issued a procedural rule to update how the agency designates a nonbank for supervision. The updates will streamline the designation proceedings for both the CFPB and nonbanks.

The CFPB examines financial institutions, including many nonbanks, for compliance with federal consumer financial protection law. The examinations can help identify issues before they become systemic or cause significant harm. As with other supervisory agencies, CFPB examinations are confidential. The CFPB periodically publishes Supervisory Highlights, which share summaries of exam findings without naming specific institutions.

In 2013, the CFPB issued procedures to govern nonbank supervisory designation proceedings. In 2022, the CFPB announced that it would begin to make active use of the supervisory designation authority. The CFPB initiated its first round of supervisory designation proceedings under the procedures in 2023.

The updated process published today reflects changes to the CFPB’s organizational structure and is informed by the CFPB’s experience with the first round of supervisory designation proceedings.

Read the procedural rule.

This post was originally published here.