The Consumer Financial Protection Bureau (CFPB) is on the verge of finalizing a proposed rule introduced in March, which will establish a public registry for nonbank entities with arbitration agreements in their contracts. According to a recent CFPB news release, this rule aims to create transparency by making the terms and conditions of these contracts publicly accessible.
What the Proposed Rule Entails
The proposed rule will require supervised nonbanks to disclose their contract terms and conditions, especially those that waive or limit consumer rights and protections, such as bankruptcy rights, liability amounts, or complaint rights. This information will be compiled into a public registry, available to consumers and other financial protection agencies.
Objectives of the Proposed Rule
The primary goals of the proposed rule include:
- Market Transparency: By making these contract terms public, the rule aims to shed light on practices that limit consumer rights.
- Improved Oversight: The registry will aid in risk-based oversight, helping regulators identify and address potentially harmful practices.
- Consumer Protection: The rule will ensure consumers are informed about the terms they are agreeing to, promoting fairer market practices.
Key Dates and Compliance Schedule
The rule is due to be finalized any day and will take effect on September 16, 2024. The compliance schedule for the registration of nonbank entities is as follows:
Larger Participant CFPB Supervised Covered Nonbanks:
- Registration Submission Period: October 16, 2024, through January 14, 2025
- Registration Deadline: January 14, 2025
Other CFPB-Supervised Covered Nonbanks (those that do not meet the definition of a larger participant):
- Registration Submission Period: January 14, 2025, through April 14, 2025
- Registration Deadline: April 14, 2025
All Other Covered Nonbanks (generally nonbanks not supervised by the CFPB):
- Registration Submission Period: April 14, 2025, through July 14, 2025
- Registration Deadline: July 14, 2025
Conclusion
The CFPB’s proposed rule on the public registry for nonbank entities with arbitration agreements aims to increase transparency and improve oversight in the financial industry. The rule will require nonbanks to disclose contract terms that limit consumer rights, with information made available in a public registry. The rule is set to be finalized soon, with a compliance deadline starting on September 16, 2024, and varying registration submission periods for different types of nonbanks.
Author: Jennifer Evancic
Jennifer.Evancic@ResourceManagement.com
Jennifer Evancic is a third-party auditor valued by creditors and large organizations for her knowledge in call monitoring within the collections industry. With meticulous attention to detail and a firm grasp of regulatory requirements, she ensures compliance with clients’ criteria and state and federal regulations.
Jennifer audits collections calls, ensuring they meet client-specific criteria and comply with regulations, providing valuable insights and maintaining industry standards.
Beyond her auditing responsibilities, Jennifer takes the lead in organizing and facilitating monthly call calibrations. These sessions serve as a collaborative forum where clients and their vendors come together to discuss call monitoring results and address any findings or areas for improvement. Jennifer’s guidance fosters open communication and ensures alignment between clients and vendors, driving continuous improvement in collections practices.
Jennifer stays up-to-date with compliance and industry best practices by participating regularly in peer meetings, regulatory updates and industry webinars. This keeps her informed about emerging issues and ensures she remains a knowledgeable leader in collections compliance.
Sign Up for the Twice Monthly Newsletter
Just enter your email address at the top orange bar at:
Collection Compliance Experts – “The Power of Expertise: Oversight Perfected”
It’s that easy! Twice a month – we provide blog updates and Resources for the Collection and Industry Professional.
Your email is just for this newsletter. We never sell your information. No fee. Opt-out at any time.
