What Happened?
On October 3, 2024, the CFPB released a Nonbank Registration: Orders Rule Coverage Chart (the “Chart”) that summarizes how an entity that is subject to an order may determine if it must register that order under the CFPB’s recently-issued Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders Final Rule (“the Final Rule”).
Why is it Important?
The Final Rule was issued earlier this year in June and requires certain nonbank entities to register with the CFPB’s Nonbank Registry (“NBR”) and provide information about certain Federal, State, or local orders imposing obligations on the nonbank entity based on violations of certain consumer protection laws. In general, an entity that is subject to an order must register that order with the NBR if the order is a “covered order” and the entity is a “covered nonbank,” as those terms are defined in the Final Rule. In addition, a covered nonbank that meets the definition of a “supervised registered entity” must also annually identify the executive(s) responsible for, and knowledgeable of, the entity’s efforts to comply with the orders identified in the NBR and submit an annual written statement and attestation. We covered the Final Rule in more detail in a previous blog post that can be found here.
Chart Summary
The Chart first considers whether an order is a “covered order” under the Final Rule. A covered order must meet all of the following criteria:
- It is an order, i.e., any written order or judgment issued by an agency or court in an investigation, matter, or proceeding;
- It is a final, public order issued by an agency or court;
- Identifies a covered nonbank by name as a party subject to the order;
- Was issued, at least in part, in any action or proceeding brought by any Federal, State, or local agency;
- Contains public provisions that impose obligations on the covered nonbank to take certain actions or to refrain from taking certain actions;
- Imposes obligations on the covered nonbank based on certain alleged violations of a covered law (e.g., Federal consumer financial laws, any other laws enforced by the CFPB, and certain unfair, deceptive, or abusive acts or practices laws at both Federal and State levels) and;
- Has an effective date on or after January 1, 2017.
Under the Final Rule, an order is not a “covered order” if it is:
- An order with effective date prior to September 16, 2024, that did not remain in effect as of September 16, 2024; or
- An order issued to a motor vehicle dealer that is predominantly engaged in the sale, leasing, and servicing of motor vehicles within the meaning of the Dodd-Frank Act 12 USC § 5519(a).
Next, the Chart considers whether a nonbank is a “covered nonbank.” A covered nonbank is a covered person under the Dodd-Frank Act that is not exempt from coverage under the Final Rule. Under the Dodd-Frank Act, a “covered person” is (A) any person that engages in offering or providing a “consumer financial product or service”; and (B) any affiliate of such person if such affiliate acts as a service provider to such person. Among other things, consumer financial products and services generally include extending credit, servicing loans, brokering of certain leases of personal or real property, providing real estate settlement services, and collecting debt, to the extent that such products and services are offered or provided for use by consumers primarily for personal, family, or household purposes.
Under the Final Rule, a nonbank is not a “covered nonbank” if it is:
- An insured depository institution or insured credit union (e.g., an FDIC-insured bank);
- A “related person” under the Dodd-Frank Act (when that is the sole reason for qualifying as a covered person);
- A State, including federally recognized Indian tribes;
- A natural person;
- Certain motor vehicle dealers; or
- A person that qualifies as a covered person under the Dodd-Frank Act only because of conduct excluded from the CFPB’s rulemaking authority.
Implementation Submission Periods
The CFPB highlights the following key dates for the implementation submission periods on its website:
- For Larger Participant CFPB-Supervised Covered Nonbanks, the registration submission period opens October 16, 2024, and the deadline to register is January 14, 2025.
- For other CFPB-Supervised Covered Nonbanks, the registration period opens January 14, 2025, and the deadline to register is April 14, 2025.
- For all other Covered Nonbanks, the registration period opens April 14, 2025, and the deadline to register is July 14, 2025.
What Do You Need to Do?
As of October 16, 2024, the registration submission period opened for Larger Participant CFPB-Supervised Covered Nonbanks, the first group of covered nonbank entities. The CFPB has issued rules identifying the criteria for “larger participants” in various consumer markets including automobile financing, student loan servicing, consumer reporting, consumer debt collection, and international money transfer markets. The requisite thresholds for covered nonbank entities in each market to be considered a “larger participant” are as follows:
- Automobile Financing – At least 10,000 aggregate annual originations. 12 C.F.R. § 1090.108(b).
- Student Loan Servicing – Account volume exceeds 1 million. 12 C.F.R. § 1090.106(b).
- Consumer Reporting – Annual receipts resulting from consumer reporting are more than $7 million. 12 C.F.R. § 1090.104(b).
- Consumer Debt Collection – Annual receipts resulting from consumer debt collection are more than $ 10 million. 12 C.F.R. § 1090.105(b).
- International Money transfer – At least 1 million aggregate annual international money transfers. 12 C.F.R. § 1090.107(b).
Covered nonbank entities should ensure that they comply with the registration requirements and be aware of the upcoming deadlines in the coming months. Moreover, as advised in our last blog post covering the Final Rule, companies should double down on compliance and be extra vigilant to avoid the designation of a “repeat offender.”
