“This is an important step in our effort to continue building a strong supervision program,” said CFPB Director Richard Cordray in a statement.
“This rule clearly lays out how we plan to implement our supervisory authority over nonbanks that we determine pose risk to consumers," he added. "We are also providing industry with a streamlined process that is fair and efficient.”
The rule outlines how the agency will notify an institution that is it being considered for oversight and the procedures to allow the institution to respond. Institutions will also be able to file a petition to end the supervision after two years.
The Dodd-Frank Act, which created the CFPB, gives it the authority to supervise new financial institutions that it judges may be using deceptive practices or otherwise pose a risk to consumers.
It can base the extended oversight on numerous complaints or judicial decisions, among other reasons.