What's Happening?
The Consumer Financial Protection Bureau (CFPB) has announced two new interpretive rules aimed at reducing regulatory burdens on consumer reporting agencies (CRAs). The first rule proposes to amend the definition of 'larger participants' in the consumer reporting market, raising the threshold from $7 million to $41 million in annual receipts. This change aligns with the Small Business Administration's definition of small businesses and is expected to reduce compliance burdens for CRAs. The second rule seeks to establish a standard definition of 'risks to consumers' to guide the CFPB's supervisory powers over nonbank covered persons. This rule aims to clarify the criteria for supervision based on conduct posing significant harm to consumers, promoting consistency in the Bureau's oversight.
Why It's Important?
These proposed rules by the CFPB are significant as they aim to streamline regulatory processes and reduce compliance costs for consumer reporting agencies. By raising the threshold for 'larger participants,' many CRAs will be exempt from the Bureau's supervisory authority, potentially lowering operational costs and fostering a more competitive market environment. Additionally, the standard definition of 'risks to consumers' could lead to more predictable regulatory oversight, benefiting nonbank entities by reducing uncertainty and focusing on serious consumer harm. This could enhance consumer protection while allowing businesses to operate with clearer guidelines.
What's Next?
The CFPB has opened the proposed rules for public comment, with deadlines set for September 22 and September 25, 2025, respectively. Stakeholders, including CRAs and nonbank entities, are expected to provide feedback, which could influence the finalization of these rules. If adopted, the rules will likely lead to significant changes in the regulatory landscape for consumer financial services, impacting how CRAs and nonbank entities manage compliance and consumer protection strategies.
