The CFPB has proposed a rule to formally define the phrase “risks to consumers with regard to the offering or provision of consumer financial products or services,” aiming to standardize its use in supervisory designation proceedings.
Currently, the Bureau designates certain nonbank firms for supervision on a case-by-case basis. The proposal seeks to establish a consistent definition by limiting “risks” to conduct that presents a high likelihood of significant harm and is directly connected to a consumer financial product or service.
The CFPB explained that the change is needed to reduce uncertainty and avoid inconsistencies across prior orders. “The proposed rule will improve consistency, foreseeability, and alignment with congressional intent,” the Bureau noted in its filing.
If finalized, the new rule is expected to result in fewer nonbank entities being designated for supervision, lowering potential examination costs for firms. The Bureau estimated supervisory exams typically cost about $27,000 per firm, and fewer than 20 nonbanks have been designated to date.
Importantly, the rule would not apply to insured depository institutions or credit unions with $10 billion or less in assets, shielding smaller credit unions from any new obligations.
Public comments are due by Sept. 25, 2025. If finalized, the rule would take effect 30 days after publication in the Federal Register, or 60 days if deemed a major rule under the Congressional Review Act.
The proposal reflected the CFPB’s effort to refine its supervisory tools while balancing consumer protection with regulatory clarity.
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