Two years ago, our blog discussed the appointment of Rohit Chopra to lead the CFPB. See Back to Basics, Continued—it’s Time to Talk About the CFBP Again. Chopra had let it be known that his top priorities for the Bureau would include ramping up enforcement of the fair lending laws and expanding the definition of “Unfair, Deceptive or Abusive Acts or Practices.” Director Chopra has followed through on his promises.

Toward the end of 2022, the CFPB proposed the creation of a registry “to detect repeat offenders.” That is Bureau speak for identifying companies that are repeatedly the subject of state agency or court orders based upon a company’s conduct that violates federal consumer financial law, or rises to the level of unfair, deceptive, or abusive acts or practices (UDAAP) under state law. The registry will be developed through a self-reporting technique, with the assistance of whistleblowers from the industry.

The concept works like this: When a final, public order is issued by an agency or court that imposes an obligation on a company to act or cease acting, then such company will be required to register under this proposed Regulation and provide certain identifying information regarding the order. The CFPB insists that this registry will better enable it to limit the harms from repeat offenders. Specifically, the Bureau says that “The registry will help unify the efforts of consumer financial protection enforcers…[and] enhance market monitoring and risk-based supervision efforts to ensure that the CFPB and its enforcement partners can identify previous lawbreakers and…[be] positioned to take action to stop further large-scale harm or continued illegal efforts across the country." This suggests quite a remedy to policing UDAAP. The problem is that this remedy itself is deceptive.

The reality is that the types of orders that the CFPB wants registered, are already public record. This registry will not advance the purported need for information. Instead, it will create another layer of government oversight that is completely unwarranted and unnecessary.

States are already issuing, supervising and enforcing the very orders that the registry seeks to record. And, states talk to one another—so misconduct in one state is rather quickly discovered in other states. There is no need for another layer of bureaucracy. The registry will only serve as a bludgeon with which to beat-up financial services providers and their designated “attesting executives.” (And, that’s a whole ‘nother story.)

Read the proposed Nonbank Registration Regulation for yourself here: Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders | Consumer Financial Protection Bureau (consumerfinance.gov) . While there are many pages of summary, explanation and appendices, the proposal itself is a mere 15 pages. You will quickly get the gist of what Director Chopra has in mind for the CFPB’s continuing role in enforcement.

Please Note: This is the two hundred-forty-second blog in a series ofBack to Basics blogs, in which relevant and resourceful information can be easily accessed by clicking Dentons - Consumer Finance Report.