CFPB taking steps to protect consumers dealing with nonbank lenders
A key federal regulator is taking steps to protect consumers from the hazards of dealing with nonbank lenders.
The Consumer Financial Protection Bureau (CFPB) announced a new, streamlined rule allowing the agency to provide supervision and guidance to nonbank lenders before significant legal violations or consumer harms are discovered.
A recent example of the CFPB's supervisory guidance can be found in the case of World Acceptance - a nonbank, installment lender.
In response to consumer inquiries, the CFPB placed World Acceptance under supervision with the goal of guiding the lender toward compliance and preventing both violations of the law and harm to consumers.
The CFPB's rule notes:
The examinations can help identify issues before they become systemic or cause significant harm.
In other words, the agency's authority allows it to review processes and suggest organizational changes - which allows nonbank lenders to continue operating while also serving consumers in ways that are not harmful or illegal.
