Yesterday, the Consumer Financial Protection Bureau (CFPB or Bureau) released a proposed rule to rescind its previous regulation requiring nonbank entities to report certain agency and court orders to a Bureau registry.
The rule, initially adopted on July 8, 2024, mandated nonbank covered persons to disclose final public orders related to consumer financial products or services. The CFPB’s proposal to rescind this rule stems from concerns that the costs imposed on regulated entities — and ultimately consumers — are not justified by the speculative benefits outlined in the original rule. The Bureau argues that the rule is unnecessary for monitoring consumer risks, as other federal and state agencies are already empowered to enforce consumer financial laws.
In our previous blog, we detailed the extensive requirements of the CFPB’s final rule, which included annual compliance certifications and the registration of orders dating back to 2017. The rule was seen as a significant regulatory development, with potential reputational and regulatory risks for noncompliance. However, the CFPB’s current proposal suggests that the regulatory burden may have outweighed the benefits, prompting a reevaluation.
The CFPB is proposing to make the rescission of the rule effective on the day it is published in the Federal Register, claiming an exemption from the requirement that any substantive rule be published not less than 30 days before its effective date.
Assuming the CFPB proceeds on the usual path and the proposed rule is published in the Federal Register today, May 14th, the 30-day comment period will expire on June 13. The rescission of the rule will thus become effective immediately on June 13, one day before the June 14, 2025 registration deadline for “other covered nonbanks.”
The CFPB is seeking comments on the proposal, particularly regarding the potential impacts on consumer access to financial products and services, especially in rural areas.
