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April 4, 2023

As Nonbanks Grow in Number and Market Power, the CFPB’s Proposed Nonbank Registry Will Help Regulators and Investors Identify Bad Actors

WASHINGTON, D.C.— Stephen Hall, Better Markets’ Legal Director and Securities Specialist, issued the following statement on Better Markets’ Comment Letter filed in response to the Consumer Financial Protection Bureau’s (CFPB’s) proposed registry for nonbanks subject to administrative and judicial orders.

“We now live in a world where consumers are accessing financial products and services less often in brick-and-mortar chartered banks and more often via FinTechs and other nonbank entities on their smartphones and computers.  This trend raises a host of problems.  As nonbanks grow in number and market power, studies from academia and our Federal Reserve System indicate that consumer credit risk is rising nationwide.  At the same time, consumers are often unaware that they have fewer regulatory protections, such as FDIC insurance or safeguards under state law, when they’re purchasing financial products from a Fintech, payday lender, or other nonbank.  Perhaps most disturbingly, nonbanks that partner with banks and other financial institutions use those relationships evade regulation and hide their true risk profiles from their consumers.

“The CFPB has an increasingly important role to play amid this shift.  In addition to their proven track record of effective rulemaking and enforcement, the CFPB has broad discretion under the Consumer Financial Protection Act to develop innovative approaches to consumer financial protection.  The CFPB’s proposed registry of nonbanks subject to enforcement orders is one such innovation that will help protect consumers while arming the Bureau and other state and federal regulators with critical information about harmful lawbreaking trends and recidivism across varying geographic areas, sectors, and entity types.

“Under the proposed rule, the CFPB will collect copies of the state and federal orders that covered nonbanks are subject to, with additional information and attestations, for inclusion in the new public registry.  We applaud the CFPB for the broad scope of consumer financial violations it intends to collect in this registry.

“By compiling these orders in one central, public repository, regulators will stay abreast of any concerning trends highlighted by enforcement activity across every U.S. jurisdiction.  And, crucially, consumers will be afforded an opportunity to research the nonbanks they are considering doing business with and understand which nonbank entities have broken the law in the past.  We anticipate that, once in place, the threat of inclusion in the nonbank registry by itself will have a strong deterrent effect against illegality among some covered nonbanks.

“Of course, those who stand to profit from lawbreaking among nonbanks offering consumer financial products and services will push back against the CFPB and argue that reporting illegality to the nonbank registry will be too costly or burdensome.  But those ‘sky-is-falling’ arguments have a long history of falling flat, and none of them apply here.  By creating a ‘one-stop-shop’ r where regulators and consumers alike can evaluate nonbanks, the CFPB will help create a consumer financial system that is safer, fairer, and less prone to lawbreaking.”

Read our full comment letter here.


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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