CFPB headquarters
The CFPB is exploring changes to how it defines which nonbank financial firms qualify as “larger participants” in four key markets: Consumer debt collection, consumer reporting, international money transfers and automobile financing.
In four advance notices of proposed rulemaking filed this week, the CFPB is seeking public comment on whether current thresholds for supervision remain appropriate given shifting market conditions and concerns over regulatory burdens on smaller entities.
The agency currently oversees debt collectors with more than $10 million in annual receipts, but noted that the industry has consolidated significantly since the rule was finalized in 2012. It is considering raising that threshold to $25 million or more to better align with current Small Business Administration (SBA) definitions and focus resources on entities with the most consumer impact.
For credit reporting agencies, the current supervision threshold is $7 million in annual receipts. The CFPB said that figure now captures many businesses considered small by SBA standards. Most of its examinations already focus on firms exceeding $50 million in receipts, and the bureau is considering aligning its threshold more closely with the SBA’s $41 million benchmark.
In the international money transfer market, the CFPB currently supervises nonbank firms that process one million or more transfers annually. It estimated that just 28 firms meet that threshold but handle 98% of all transactions. Raising the threshold to 10 million transfers would reduce the number of supervised firms while still covering 94% of activity.
For auto financing, the existing threshold is 10,000 originations per year. The CFPB estimated that increasing this to 550,000 originations would reduce the number of supervised entities by more than 80%, allowing the agency to concentrate on the most active lenders.
In all four proposals, the CFPB said it is concerned that current thresholds may impose unnecessary burdens on small businesses and dilute its ability to target major market participants. Public comments are due within 45 days of publication in the Federal Register.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.