12 CFR Part 1091
The Consumer Financial Protection Bureau (CFPB) is proposing to adopt a standard definition of “risks to consumers with regard to the offering or provision of consumer financial products or services” that will bind the Bureau in proceedings to designate nonbank covered persons for Bureau supervision. This will ensure that the Bureau acts within the bounds of its statutory authority and provide clarity to institutions about the standard the Bureau applies.
Comments are due by September 25, 2025 and the proposed rule can be found here.
Summary
Section 1024(a)(1(C) of the Consumer Financial Protection Act of 2010 (CFPA) authorizes the Bureau to supervise a nonbank covered person that the Bureau has reasonable cause to determine is engaging or has engaged, in conduct that poses risks to consumers with regard to the offering or provision of consumer financial products/services.
The Bureau has existing procedures (found at 12 CFR part 1091) that govern the process by which the Bureau provides notice and a reasonable opportunity to respond. The Bureau has requested public comments on amendments to that process.
To date, the Bureau has not issued a rule addressing the meaning of “risks to consumers” in the context of Section 1024(a)(1)(C). Instead, the Bureau has issued orders in individual cases. The Bureau has three concerns regarding this approach. First, the ad hoc nature of individual orders creates a danger that the Bureau’s application of “risks to consumers” may not be consistent. Second, the status quo creates uncertainty for institutions facing potential designation about what standard the Bureau will apply to their case. Third, without a binding framework on the meaning of “risks of consumers,” the Bureau may not conform to the best reading of Section 1024(a)(1)(C) in individual cases.