Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders; Rescission

<RULE> CONSUMER FINANCIAL PROTECTION BUREAU <CFR>12 CFR Part 1092</CFR> <DEPDOC>[Docket No. CFPB-2025-0011]</DEPDOC> <RIN>RIN 3170-AB32</RIN> <SUBJECT>Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders; Rescission</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Consumer Financial Protection Bureau. <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Consumer Financial Protection Bureau (Bureau or CFPB) is issuing a final rule to rescind its rule requiring certain types of nonbank covered persons subject to certain final public orders obtained or issued by a government agency in connection with the offering or provision of a consumer financial product or service to report the existence of the orders and related information to a Bureau registry. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This rule is effective on October 29, 2025. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Dave Gettler, Paralegal, Office of Regulations, at 202-435-7700. If you require this document in an alternative electronic format, please contact <E T="03">CFPB_Accessibility@cfpb.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Summary of the Final Rule</HD> Pursuant to its authority under sections 1022(b), 1022(c)(1)-(4), and 1024(b) of the Consumer Financial Protection Act of 2010, 12 U.S.C. 5512 and 5514 (CFPA), the Bureau is adopting this final rule to rescind its rule adopted on July 8, 2024, via 89 FR 56028, Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders, and codified in 12 CFR part 1092 (the “NBR Rule”). The NBR Rule requires certain types of nonbank covered persons subject to certain final public orders obtained or issued by a government agency in connection with the offering or provision of a consumer financial product or service to report the existence of those orders and related information to a Bureau registry. The Bureau is finalizing the rescission of the NBR Rule based on concerns that the costs the rule imposes on regulated entities, which may be passed on to consumers, are not justified by the speculative and unquantified benefits to consumers discussed in the analysis proffered in the NBR Rule. In addition, the Bureau is finalizing this rescission based in part on the cost to the Bureau of maintaining the registration system created by the NBR Rule, which the Bureau believes is not a necessary tool to effectively monitor and reduce potential risks to consumers. <HD SOURCE="HD1">II. Background</HD> <HD SOURCE="HD2">A. The NBR Rule</HD> The Bureau published the NBR Rule in the <E T="04">Federal Register</E> on July 8, 2024, and it took effect on September 16, 2024. The Bureau stated that it was issuing the NBR Rule, as described below, because it believed the statutory purposes of the Bureau's market monitoring and nonbank supervision responsibilities would be furthered by the collection and publication of information about the existence of covered orders at covered nonbanks, and in the case of supervised registered entities, steps taken to comply with those covered orders. Specifically, it believed that the Bureau's establishment of a centralized system for collecting and publishing information about covered orders against covered nonbanks would lead to more efficient and effective monitoring, detection, assessment, public awareness, and mitigation of the risks posed to consumers by violations of Federal consumer financial law, including repeat violations. The NBR Rule generally found that such outcomes, if achieved, would be beneficial to consumers. Underlying the purported utility of the NBR Rule was the Bureau's repeated assertion that the registry established by the rule would help to address risks to consumers related to corporate recidivism engaged in by covered nonbanks. For example, the Bureau stated that the NBR Rule would “focus on monitoring for risks to consumers related to repeat offenders of consumer protection law” and that a public registry “will help the Bureau and the broader public monitor trends concerning corporate recidivism relating to consumer protection law, including areas where prior violations of law are indicia of risks to consumers.”  <SU>1</SU> <FTREF/> In addition, the Bureau stated that the registry “will provide a valuable mechanism to help ensure the Bureau is rapidly made aware of . . . repeat offenders across a range of markets and enforcement agencies.”  <SU>2</SU> <FTREF/> According to the Bureau's analysis, “repeat law violator status . . . is a highly pertinent characteristic” of nonbank covered persons, <SU>3</SU> <FTREF/> to the extent that the Bureau intended to “mitigate recidivism and more effectively deter unlawful behavior” by creating a public registry. <SU>4</SU> <FTREF/> Thus, while maintaining that “the registry will accomplish a number of goals,” the Bureau emphasized that it would have “a particular focus on monitoring for risks to consumers related to repeat offenders of consumer protection law.”  <SU>5</SU> <FTREF/> <FTNT> <SU>1</SU>  89 FR 56028 at 56029-30. </FTNT> <FTNT> <SU>2</SU>   <E T="03">Id.</E> at 56035; <E T="03">see also id.</E> at 56031 (stating the Bureau's belief that monitoring for covered orders “will allow the Bureau to track specific instances of, and more general developments regarding, potential corporate recidivism”). </FTNT> <FTNT> <SU>3</SU>   <E T="03">Id.</E> at 56036. </FTNT> <FTNT> <SU>4</SU>   <E T="03">Id.</E> at 56042. </FTNT> <FTNT> <SU>5</SU>   <E T="03">Id.</E> at 56062. </FTNT> The NBR Rule imposes information collection requirements on most nonbank covered persons to the extent they are subject to certain public agency and court orders, including orders under numerous different provisions in Federal and State law (“covered orders”). <SU>6</SU> <FTREF/> Specifically, the NBR Rule contains three sets of provisions: (1) a covered order registration requirement for virtually all nonbanks engaged in the offering or providing of any consumer financial product or service (“covered nonbanks”);  <SU>7</SU> <FTREF/> (2) an annual covered order compliance reporting requirement for Bureau-supervised registered entities; and (3) provisions authorizing the Bureau to publish certain information collected pursuant to the registration requirement. <SU>8</SU> <FTREF/> Below, this final rule provides general background on key aspects of each of these sets of provisions. <SU>9</SU> <FTREF/> <FTNT> <SU>6</SU>  In § 1092.201(e), the NBR Rule defines a “covered order” as an order that, among other things, has an effective date on or after January 1, 2017, and imposes certain obligations on the covered nonbank based on an alleged violation of a covered law. In § 1092.201(c), the regulation defines “covered law” as including Federal consumer financial law as well as a number of other laws enforced by the Bureau, the prohibition against unfair or deceptive acts or practices in section 5 of the Federal Trade Commission Act and its implementing rules enforced by other Federal agencies, and certain State laws as described in § 1092.202(c)(4)-(6), including several hundred of which are specified in appendix A to part 1092. </FTNT> <FTNT> <SU>7</SU>  In § 1092.201(d), the NBR Rule defines “covered nonbank” as including most types of nonbanks, with specified exceptions for insured depository institutions, insured credit unions, a person who is a covered person solely due to being a related person, a State, a natural person, certain motor vehicle dealers, and persons subject to certain exclusions in CFPA section 1027. </FTNT> <FTNT> <SU>8</SU>  Covered nonbanks also must submit required information in accordance with the Bureau's filing instructions. <E T="03">See</E> § 1090.102(a); CFPB Nonbank Registration Filing Instructions Guide (FIG) (Jan. 2025), <E T="03">https://files.consumerfinance.gov/f/documents/cfpb_nonbank-registration_filing-instructions-guide.pdf.</E> </FTNT> <FTNT> <SU>9</SU>  The NBR Rule also contains provisions pursuant to which persons may submit filings to the Bureau's nonbank registry stating that they have a good-faith basis to believe that the NBR Rule or one or more of its provisions does not apply. <E T="03">See</E> § 1092.202(g) & 204(f). These are not mandatory information collection requirements and are not discussed further here. </FTNT> First, the NBR Rule generally requires registration by covered nonbanks that are subject to covered orders that are in effect as of September 16, 2024, or that take effect on that date or at any later time. The NBR Rule requires these covered nonbanks to register with the Bureau and to submit certain information about each covered order to the Bureau. <SU>10</SU> <FTREF/> Under § 1092.202(b), each covered nonbank must submit identifying information and administrative information as described in § 1092.202(c), <SU>11</SU> <FTREF/> as well as information regarding each covered order described in § 1092.202(d) as follows: <FTNT> <SU>10</SU>  Registration is required within 90 days after the applicable nonbank registry implementation date, or 90 days after the effective date of the covered order, whichever is later. <E T="03">See</E> § 1092.202(b)(2). The implementation dates are October 16, 2024, for supervised registrants that are larger participants under CFPB larger participant rules (resulting in a registration deadline of January 14, 2025), January 14, 2025, for all other supervised registrants (resulting in a registration deadline of April 14, 2025), and April 14, 2025, for all other covered nonbanks (resulting in a registration deadline of July 14, 2025). <E T="03">See https://www.consumerfinance.gov/data-research/nbr-submi ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 132k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━