Consumer advocates on Tuesday welcomed a new proposal from a key government agency for a registry of nonbank financial institutions, which would be required to list themselves when they are subject to court orders and other legal actions.
The Consumer Financial Protection Bureau (CFPB) issued a new proposed rule calling for a "Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders," which would require financial corporations to register "upon becoming subject to a public written order or judgment imposing obligations based on violations of certain consumer protection laws."
"This not only would help law enforcers spot repeat offenders; the public would be able to look at a trusted registry to see if a particular company is worth the risk."
The proposed registry would help the CFPB track and mitigate risks posed by corporations that have repeatedly broken consumer protection laws and would allow the bureau to share information with other regulators and law enforcement agencies.
The public registry would also help consumers access crucial information about companies before entering business relationships with financial companies such as mortgage servicers, title companies, and payday and installment loan companies.
American Banker reported that the registry, if adopted, could include federally insured banks and credit unions in the future.
"A public rap sheet for corporations is a welcome proposal," said Bartlett Naylor, financial policy advocate for Public Citizen . "This not only would help law enforcers spot repeat offenders; the public would be able to look at a trusted registry to see if a particular company is worth the risk."
Naylor added that the registry could "become a powerful tool for consumers and small businesses alike to track corporate offenders, who have embraced fines and litigation as a cost of doing business and rely on forced arbitration to keep consumers from having their day in court."
Consumers would also have access to information about what companies are doing to end their lawbreaking, as large corporations on the registry would be "required to designate an individual to attest whether the firm is adhering to registered law enforcement orders," according to the CFPB.
The bureau noted that the proposed registry would help the CFPB fulfill the mandate it was given by Congress when it was established in 2011 at the urging of progressive Sen. Elizabeth Warren (D-Mass.).
Congress tasked the bureau "with monitoring for risks to consumers in the offering or provision of consumer financial products and services and supervising the activities of certain nonbanks," said the CFPB.
"Protecting American households is a shared effort across local, state, and federal authorities," said CFPB Director Rohit Chopra. "The proposed registry will help the CFPB, the law enforcement community, and the public limit the harms from repeat offenders."
\u201cIn the financial marketplace, repeat offenders cause severe harm to the public, scamming Americans out of billions of dollars. Today, @CFPB proposed a new law enforcement registry to detect potential repeat offenders. https://t.co/1ai0v0IbW7\u201d— Rohit Chopra (@Rohit Chopra) 1670866840
The proposed rule will be open for public comment for 60 days following its publication in the Federal Register.