United States CFPB Finalises Non-Bank Registry Rule to Target Corporate Repeat Offenders

The United States Consumer Financial Protection Bureau has finalised a rule establishing a Non-Bank Registry of Enforcement Actions. The registry will require non-bank financial companies subject to certain government orders to register formally with the Bureau and requires non-banks subject to CFPB supervision to submit annual compliance attestations signed by a senior executive.

The rule targets what the CFPB has characterised as a pattern of corporate recidivism in the non-bank financial sector, in which companies may face regulatory sanctions from one agency or in one jurisdiction without that information being available to other supervisors or to the consumers those companies serve.

REGISTRATION TIMELINE AND SCOPE

The rule takes effect on 16 September 2024. Non-bank entities subject to government orders since 1 January 2017 are required to register under the framework. Registration is phased in through three implementation dates: 16 October 2024 for larger participants subject to CFPB supervision, 14 January 2025 for other supervised non-banks and 14 April 2025 for all other covered non-banks, and no firm has to submit information before 14 January 2025.

The rule includes an executive attestation requirement, under which a designated executive at each CFPB-supervised registrant must provide an annual written statement on the firm's compliance with its registered orders.

The scope of the registry encompasses non-bank financial companies, a broad category that includes mortgage servicers, payday lenders, debt collectors, consumer reporting agencies, remittance providers, and other financial services businesses that are not chartered depository institutions.

AGENCY AND INDUSTRY VIEWS

The agency has argued that consumers dealing with non-bank lenders and servicers are entitled to equivalent protections and that the previous absence of a centralised enforcement record created an information asymmetry disadvantaging both regulators and consumers.

Industry groups representing mortgage companies and consumer finance businesses raised concerns during the rulemaking consultation period about compliance costs and the breadth of the definition of covered orders. The CFPB concluded that the registry addresses a genuine supervisory gap and that the attestation requirement, while imposing an obligation on regulated entities, is proportionate to the consumer protection objective and aligned with the Bureau's statutory mandate.