On September 25, the CFPB finalized a rule rescinding its several Biden-era amendments to the risk-based supervisory designation process and reinstating the Bureau's 2013 framework under the Dodd-Frank Act. The rule, effective October 27, restores confidentiality of decisions and orders, revives the role of a recommending official, and eliminates several procedural changes made in 2022-2024.
Under the Bureau's risk-based supervision process, the CFPB can exercise supervisory authority over any persons or entities that "the Bureau has reasonable cause to determine [...] is engaging, or has engaged, in conduct that poses risks to consumers with regard to the offering or provision of consumer financial products or services." Under the Biden-era amendments, the CFPB eliminated internal checks on review, limited certain procedural safeguards, and gave the CFPB director the discretion to release supervisory designation materials publicly for companies that contested supervisory designation.
The Bureau explained that public disclosure of contested designation orders created reputational pressure on nonbanks to consent to supervision. By restoring confidentiality and simplifying procedures, the CFPB aims to reduce that risk while maintaining fairness in how entities are designated for oversight.
The final rule includes the following elements:
- Confidentiality reinstated. Decisions and orders in contested proceedings will again be treated as confidential supervisory information, reversing the prior rules that allowed publication.
- Recommending official restored. A recommending official must now provide a recommended determination to the Director before any final decision, reviving a step eliminated in 2024.
- Limited adjustments preserved. The Bureau retained selected 2024 updates, including written replies from initiating officials, video options for oral responses, supplemental briefing, simplified consent agreements, and updated titles.
- Other amendments rescinded. Expanded notice requirements, new deadlines, withdrawal provisions, and issue-exhaustion rules adopted in 2022–2024 were eliminated as unnecessary or overly complex.
Putting It Into Practice: Even with ongoing broader pullbacks to the CFPB's enforcement and supervisory powers, the Bureau continues to roll back Biden-era rules and regulations (previously discussed here and here). This action restores confidentiality and limits reputational exposure for nonbanks in the risk-based supervision process. In addition, while the Bureau has this authority, it will not exercise it under the new administration.
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