CFPB headquarters
The Defense Credit Union Council (DCUC) is urging the Consumer Financial Protection Bureau to rethink a proposed rule that would tighten the legal standard for designating nonbank companies for supervision, arguing the change would weaken oversight just as nonbank activity becomes more complex.
While DCUC supports the CFPB’s push for “consistency, transparency and streamlined oversight,” the group said the draft would shrink the Bureau’s own authority and create an uneven regulatory landscape. “The CFPB’s proposal narrows its own ability to oversee nonbanks at a time when their number and complexity are growing,” Jason Stverak, DCUC’s chief advocacy officer, said. “This not only increases risks to consumers but also places regulated credit unions — already subject to rigorous federal and state examinations — at a competitive disadvantage.”
DCUC’s letter flagged three core issues: First, requiring a “high likelihood of significant harm” would let many harmful practices evade scrutiny, including small but widespread abuses such as deceptive fees; second, limiting supervision to conduct “directly connected” to financial products would sideline critical functions like cybersecurity, data protection, servicing and collections; and third, with few nonbanks currently examined and staffing pressures at the CFPB, raising the bar would further reduce oversight of high-risk actors while intensifying pressure on compliant credit unions.
“Removing nonbank financial companies from the scope of supervision creates immeasurable risks for consumers and the broader industry,” Stverak added. “CFPB must keep its authority strong to ensure fair competition and consumer protection.”
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