Four advance notices of proposed rulemaking scheduled for publication on August 8 will solicit public comment on whether the CFPB should raise the size thresholds that determine which nonbank entities qualify as "larger participants" subject to routine Bureau supervision. The notices address the automobile-financing, international money-transfer, consumer-reporting, and consumer debt-collection markets.
Each of the applicable larger participant rules—adopted between 2012 and 2015 under the Consumer Financial Protection Act—sets a threshold based on origination volume or annual receipts. The CFPB is now considering whether those thresholds may sweep in too many small and midsize firms, thereby diverting limited supervisory resources from the largest market participants.
The Bureau's analysis shows that a handful of very large entities now dominate each market. To concentrate oversight on those firms, the notices float substantial threshold increases:
- Automobile financing. Raise the 10,000-origination bar to 300,000, 550,000, or 1,050,000 loans or leases. At the high end, only five captive lenders would remain under supervision, covering about 42% of originations.
- International money transfers. Boost the one-million-transfer test to 10 million, 30 million, or 50 million annual remittances. This would reduce the number of covered providers from 28 to as few as four, while still capturing 61-94% of transfer volume.
- Consumer reporting. Align the $7 million-receipt trigger with the Small Business Administration's $41 million small-business cap, a change that would exclude dozens of regional and specialty bureaus yet keep at least six nationwide players within reach.
- Debt collection. Lift the $10 million-receipt threshold to $25 million, $50 million, or $100 million, acknowledging industry consolidation and rising SBA size standards; even at $50 million, the Bureau estimates it would still cover more than 40% of market revenue.
Putting It Into Practice: The CFPB continues to scale back on its supervisory role in consumer protection (previously discussed here and here). Comments on the advance notices will be due 45 days after publication in the Federal Register. We will keep you posted on what develops.
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