On June 3, 2024, the Consumer Financial Protection Bureau (“CFPB”) issued the Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders Final Rule which adds a registration and reporting requirement for certain nonbank financial companies when they become subject to certain federal, state, and local agency orders, court orders, and judgments for violations of consumer protection laws. The final rule also requires certain supervised nonbanks to file annual reports regarding their compliance with registered orders. The CFPB states that the registry is intended to help law enforcement identify repeat offenders of consumer laws and recidivism trends. The registry information will be available online for use by the public and regulators.
The final rule applies to certain nonbanks that are “covered persons” under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). In general, covered persons participate in offering or providing consumer financial products or services. The rule does not apply to insured depository institutions and credit unions, persons covered solely due to being a “related person”, U.S. States and federally recognized Indian tribes, natural persons, and other excluded entities.
Applicable nonbank financial companies will be required to register with the CFPB when they become subject “to a public written order imposing obligations based on violations of certain consumer protection laws.” Additionally, “registered entities” with at least $5 million in qualifying annual receipts will be required to provide an annual report regarding the company’s compliance with any outstanding registered orders. The report must describe steps taken to review and oversee company activities subject to an order reported in the registry during the preceding calendar year. The written report must be signed by at least one identified senior executive who attests to the company’s compliance with current orders. Nonbank companies subject to an order published in the NMLS Consumer Access website will be able to elect to comply with a simplified filing process that includes a one-time registration instead of the annual notification and written-statement requirements.
The final rule amends Chapter X, Title 12 of the Code of Federal Regulations by adding Part 1092. It is effective for covered orders that remain in effect on September 16, 2024, or have an effective date on or after that time. The CFPB will be publishing filing instructions to provide details on what information must be submitted, including the formats required. In general, the registry system will collect basis company information and some administrative information such as a list of affiliates. Covered order information will also be collected, including the effective date and date of expiration. Copies of executed orders must be provided, with any nonpublic information clearly marked.
The CFPB also issued an Executive Summary detailing the final rule’s requirements and timeframes for implementation which will be rolled out in phases. Three categories are identified for the implementation submission period, including 1) Larger participant CFPB-Supervised Covered Nonbanks, 2) Other CFPB-Supervised Covered Nonbanks, and 3) All Other Covered Nonbanks. The first registration submission period begins October 16, 2024. The final rule provides a 90-day window for each category of covered nonbanks to register covered orders with effective dates from January 1, 2017, until the start of their implementation submission period. There are separate timing requirements for registering covered orders and submitting required annual written statements.
In prepared remarks, CFPB Director Rohit Chopra suggests that a registry, like the one established by the final rule, could have helped state regulators identify “important patterns or trends that could have been acted on in a broader way,” prior to the 2008 financial crisis. Director Chopra also describes how the registry is part of a larger effort by the CFPB to rein in repeat offenders, which also includes the establishment of a Repeat Offenders Unit within the agency. This enforcement program has brought actions against repeat offenders in different consumer markets including mortgage lenders, debt collectors, payday lenders, and credit reporting companies.
