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Effective October 27, 2025, the CFPB rescinded the amendments to the Procedures for Supervisory Designation Proceedings that it adopted in April 2022, November 2022, and April 2024, , with the exception of some limited process adjustments.
Section 1024(b)(7) of the Consumer Financial Protection Act authorizes the CFPB to "prescribe rules to facilitate supervision" of the nonbank covered persons described in section 1024(a), i.e., those that are deemed to have engaged in or to be engaging in conduct that poses risks to consumers, as well as to facilitate the "assessment and detection of risks to consumers." In 2013, the CFPB issued procedural rules to govern these supervisory designation proceedings, under which information regarding the proceedings was treated as confidential supervisory information and not publicly disclosed. Those rules were codified at 12 C.F.R. Part 1091. In April 2022, November 2022, and April 2024, the CFPB issued a series of rules (collectively, the 2022-2024 rules) that, among other changes, amended the 2013 rules to enable the Director to publicly release the Director's final decisions and orders designating respondents for supervision.
The rescission eliminates the Hobson's choice in "pose risk" supervisory designation proceedings, caused by the 2022-2024 rules, between (1) contesting the designation, in which case the CFPB would make its determination public or (2) consenting to the designation, in which case the CFPB would treat everything as nonpublic confidential supervisory information. This "choice" caused many entities to consent to the designation in order to avoid a public decision and order discussing alleged risks to consumers from their consumer financial products or services, even in situations where they had meritorious responses to the initiating official's notice of reasonable cause. The CFPB concluded that the harm caused by reputational pressure leading to unmeritorious designations was not outweighed by benefits in disclosure.
In May 2025, the CFPB issued a notice of proposed rulemaking that requested public comment on rescinding the 2022-2024 rules and restoring the 2013 rule. The CFPB received eight comment letters (four from industry trade associations, two from consumer groups, and two from individuals). After considering the comments, the CFPB decided to rescind the 2022-2024 rules, except that the Bureau retained some limited process adjustments that were contained in the 2024 rule.
The final rule also included the following process changes:
- Reinstating a process for a recommended decision by an intermediate "recommending" official;
- Providing the opportunity for a reply by the initiating official;
- Permitting a supplemental response by video (in addition to supplemental responses in-person and by phone); and
- Providing for the possibility of additional supplemental briefing by the parties.
The CFPB has separately published a notice of proposed rulemaking to better define the legal standard applicable to supervisory designation proceedings.
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