CFPB Invokes Authority to Examine Non-Bank Financial Companies

The CFPB announced it is invoking a largely unused legal provision to examine nonbank financial companies that pose risks to consumers. The CFPB believes that utilizing this dormant authority will help protect consumers and level the playing field between banks and non-banks. The CFPB is also seeking public comments on proposed amendments to its procedural rules to make this process more transparent. Comments on the proposal will be accepted for 30 days following Federal Register publication.

Non-banks (including fintechs) whose activities the CFPB has reasonable cause to determine pose risks to consumers are entities subject to CFPB supervision under the Consumer Financial Protection Act. For example, activities of some nonbank entities may involve potentially unfair, deceptive, or abusive acts or practices, or other acts or practices that potentially violate federal consumer financial law. The CFPB may base such reasonable cause determinations on complaints collected by the CFPB, or on information from other sources, such as judicial opinions and administrative decisions. The CFPB may also learn of such risks through whistleblower complaints, state partners, federal partners, or news reports.

Question of the Week

Q. We are going to institute a new fee for non-member check cashing. Do we have to send out a 30-day advance change in terms notice?

A. No.

While truth in savings does require you to send a change in terms notice for any change in a term that is required to be disclosed under 707.4, if the change may reduce the annual percentage yield or adversely affects the member; a fee for non-member check cashing would not fall into this category.

You would want to update your fee schedule and make the non-member aware of the fee prior to cashing the check.

Related Links

12 CFR 707.4
12 CFR 707.5
TIS Official Staff Interpretations

Compliance Alerts

National Credit Union Administration

NCUA Issues Prompt Corrective Action Relief Renewal Follow-up for Credit Unions

Alexandria, Va. (April 29, 2022) – During its February meeting, the National Credit Union Administration Board approved by notation vote a temporary order that specifies temporary revisions to the earnings-retention requirement for credit unions that are adequately capitalized. This temporary order is effective from April 1, 2022, through and including March 31, 2023.

As part of this interim final rule, the NCUA Board extended the time-limited regulatory provision that the Board re-adopted in an April 2021 interim final rule.

Agency Information Collection Activities; Proposed Collection; Comment Request: The National Credit Union Administration (NCUA), as part of a continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to comment on the following extensions of currently approved collections, as required by the Paperwork Reduction Act of 1995.

Consumer Financial Protection Bureau

Supervisory Authority Over Certain Nonbank Covered Persons Based on Risk Determination: The Consumer Financial Protection Bureau (Bureau) is amending an aspect of procedures for establishing supervisory authority based on a risk determination. Specifically, the Bureau is adding a mechanism for the Bureau to make final decisions and orders in these proceedings public. The Bureau welcomes comments on this rule, and the Bureau may make further amendments if it receives comments warranting changes.

Office of Foreign Asset Control

Sanctions Actions: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is publishing the names of one or more persons that have been placed on OFAC’s Specially Designated Nationals and Blocked Persons List based on OFAC’s determination that one or more applicable legal criteria were satisfied. All property and interests in property subject to U.S. jurisdiction of these persons are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.

Small Business Administration

Reporting and Recordkeeping Requirements Under OMB Review: SBA Form 1050, Settlement Sheet is used in SBA’s 7(a) Loan Program to collect information from lenders and borrowers regarding the disbursement of loan proceeds… SBA has determined that the section for “Authorized Use of Proceeds” does not include in the Settlement Sheet all the categories for” Use of Proceeds” this addition to the 1050 Settlement Sheet would enable the agency to effectively monitor compliance with loan disbursement procedures and will align with the “Use of Proceeds” categories for 7(a) loans. As a result, SBA is proposing to change both the content and format of Form 1050.

Questions? Contact the Compliance Hotline: 1.800.546.4465;

Posted in Compliance News, Compliance News, Compliance Question.