- A group of 20 Democratic AGs—joined by the Hawaii Office of Consumer Protection—sent a letter to the CFPB opposing a proposed rule that would limit the Bureau’s authority to oversee nonbank financial services providers, such as peer-to-peer payment processors, neobanks, digital wallet providers, and online or mobile-app lenders.
- Under the proposed rule, the CFPB’s ability to designate nonbanks for supervision would be limited solely to providers whose conduct presents a “high likelihood of significant harm to consumers” and is “directly connected” to the provision of a consumer financial product or service, as defined by the Dodd-Frank Act.
- In their letter, the AGs urge the CFPB to abandon the proposed rule, arguing that the added thresholds are arbitrary, unduly restrictive, contrary to public policy, inconsistent with the flexible standard that Congress intended with Dodd-Frank, and unnecessary given the CFPB’s sparing use of its designation authority in the past.
- In making these arguments, the AGs argue that nonbanks play an increasingly significant role in the everyday financial lives of consumers and that the CFPB’s supervisory authority over nonbanks is critical for consumer protection and financial market fairness.
- We have previously reported on consumer protection measures that AGs have undertaken in response to changes to the CFPB under the Trump administration, including multiple letters from a group of 19 Democratic AGs urging the CFPB to reject proposals limiting oversight of certain financial markets. We also reported on the CFPB’s nonbank registration rule.