CFPB nonbank examination will include various approaches
After Director Cordray’s appointment, the CFPB reminded the public what its approach will be for nonbank examination. For certain nonbanks including mortgage companies, payday lenders, and private education lenders, CFPB supervision is effective immediately.
The CFPB is careful to note that its goal is to “prevent harm to consumers and promote the development of markets for consumer financial products and services that are fair, transparent, and competitive.”
To accomplish these goals, the CFPB will employ a combination of any of the following tools as outlined in the recent CFPB Blog post: requiring nonbanks to file certain reports, reviewing the documents that nonbanks utilize to offer products and services to customers, reviewing nonbank compliance systems and policies, and reviewing the correspondence between nonbanks and customers.
The CFPB explained that “in general,” it will notify a nonbank in advance of an examination. Thus, that leaves the door open to “surprise” CFPB examinations. That should sufficiently concern nonbanks that will be examined by the CFPB.
Expect the CFPB to coordinate with the Ohio Department of Commerce for nonbank examinations.