News built for finance pros
CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.
One aspect of due diligence is about to get a little easier.
The Consumer Financial Protection Bureau (CFPB) will soon open a registry of nonbank financial companies that have broken consumer protection laws. Under a new CFPB rule, nonbank financial entities that are subject to court orders must register with the CFPB. The registry will make it easier for law enforcement to track repeat offenders, CFPB director Rohit Chopra said in prepared remarks.
In time, the agency hopes to make some of the registry available online, “which will help investors and business partners conduct due diligence on firms, as well as the public more broadly,” Chopra said.
The new CFPB rule stipulates that companies accused of wrongdoing need to submit copies of court orders to the agency, and have a senior executive submit yearly attestation about their compliance with the orders.
Court orders against nonbank companies are publicly available, but they haven’t yet been aggregated in one place, the CFPB wrote. That’s made it easier for bad actors to evade consequences. The agency has “seen fraudsters and scam artists get caught in one part of the country and restart their scheme in a new place hoping to not get caught again,” Chopra said.
Nonbank entities that could be subject to the rule include credit bureaus, debt collectors, mortgage lenders, and payday lenders.
Lobbying groups, including the US Chamber of Commerce, have voiced opposition to the registry, claiming it would be burdensome for companies to comply, the New York Times reported.
Chopra likened the registry to lists of disbarred lawyers or physicians, and said it was part of a broader effort on the CFPB’s part to prevent multiple offenses. “Too many American families have been harmed by corporate repeat offenders in a rinse-and-repeat cycle of illegality, where bad actors see fines and penalties as the cost of doing business,” he said.