[Federal Register Volume 90, Number 184 (Thursday, September 25, 2025)]
[Rules and Regulations]
[Pages 46036-46045]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-18622]
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CONSUMER FINANCIAL PROTECTION BUREAU
12 CFR Part 1091
[Docket No. CFPB-2025-0013]
RIN 3170-AB34
Procedures for Supervisory Designation Proceedings
AGENCY: Consumer Financial Protection Bureau.
ACTION: Final rule.
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SUMMARY: The Consumer Financial Protection Bureau (CFPB or Bureau) is
rescinding the amendments it adopted in April 2022, November 2022, and
April 2024, to the Procedures for Supervisory Designation Proceedings,
with the exception of some limited process adjustments.
DATES: This final rule is effective October 27, 2025.
FOR FURTHER INFORMATION CONTACT: Dave Gettler, Paralegal Specialist,
Office of Regulations, at 202-435-7700 or https://reginquiries.consumerfinance.gov/. If you require this document in an
alternative electronic format, please contact
[email protected].
SUPPLEMENTARY INFORMATION:
I. Background
The Consumer Financial Protection Act of 2010 (CFPA) established
the Bureau. Section 1024(a)(1)(C) of the CFPA authorizes the Bureau to
supervise a nonbank covered person that the Bureau ``has reasonable
cause to determine, by order, after notice to the covered person and a
reasonable opportunity for such covered person to respond . . . is
engaging, or has engaged, in conduct that poses risks to consumers with
regard to the offering or provision of consumer financial products or
services.'' \1\
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\1\ 12 U.S.C. 5514(a)(1)(C). The Bureau must base such
reasonable-cause determinations on complaints collected by the
Bureau under 12 U.S.C. 5493(b)(3), or on information collected from
other sources. Id.
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In 2013, the CFPB issued procedures to govern these supervisory
designation proceedings (2013 rule).\2\ Under the 2013 rule,
information regarding the proceedings was treated as confidential
supervisory information and not publicly disclosed. The process under
the 2013 rule began when the ``initiating official'' from the Bureau's
supervision function served a notice of reasonable cause on the
respondent. The respondent had an opportunity to submit a written
response. The respondent could then provide a ``supplemental oral
response'' before the Associate Director of the Division of
Supervision, Enforcement, and Fair Lending (Associate Director of
SEFL), in which the initiating official also participated alongside the
respondent. The Associate Director of SEFL then formulated a
recommended determination to the Director of the Bureau (the Director)
about whether to designate the respondent. After considering the
recommended determination, the Director made a final determination,
which like other information about the proceeding was confidential
supervisory information. It was also possible for a respondent to elect
to voluntarily consent to supervision, as an alternative to this
contested process.
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\2\ 78 FR 40352 (July 3, 2013); see also 85 FR 75194 (Nov. 24,
2020) (updating certain cross-references).
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In April 2022, November 2022, and April 2024, the Bureau issued a
series of rules (collectively, the 2022-2024 rules) that amended the
2013 rule.\3\ Most significantly, the new rules enabled the Director to
publicly release the Director's final decisions and orders designating
respondents for supervision. The Bureau also removed the role of the
Associate Director of SEFL from the process, citing an internal
reorganization that abolished that position, and instead specified that
the Director would preside over the proceeding without receiving a
recommended determination. The Bureau also made various other changes.
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\3\ 87 FR 25397 (Apr. 29, 2022); 87 FR 70703 (Nov. 21, 2022); 89
FR 30259 (Apr. 23, 2024).
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In May 2025, the Bureau issued a notice of proposed rulemaking that
requested public comment on rescinding the 2022-2024 rules and
restoring the 2013 rule.\4\ The Bureau received eight comments.\5\
After considering the comments, the Bureau has decided to rescind the
2022-2024 rules, except that the Bureau is retaining some limited
process adjustments that were contained in the 2024 rule.
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\4\ 90 FR 20401 (proposed May 14, 2025).
\5\ The comments are available at https://www.regulations.gov/document/CFPB-2025-0013-0001/comment.
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II. Legal Authority
Section 1024(b)(7) of the CFPA authorizes the CFPB to ``prescribe
rules to facilitate supervision'' of the nonbank covered persons
described in section 1024(a), as well as to facilitate ``assessment and
detection of risks to consumers.'' \6\ Additionally, section 1022(b)(1)
provides, in relevant part, that the CFPB Director ``may prescribe
rules . . . as may be necessary or appropriate to enable the Bureau to
administer and carry out the purposes and objectives of the Federal
consumer financial laws, and to prevent evasions thereof.'' \7\ The
CFPB issues this rule based on its authority under section 1024(b)(7)
and section 1022(b)(1).
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\6\ 12 U.S.C. 5514(b)(7).
\7\ 12 U.S.C. 5512(b)(1).
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III. Discussion
A. Public Release of Decisions and Orders
Proposed Rule
The proposed rule explained that the Bureau has particular concerns
about the manner in which the 2022-2024 rules provided for public
release of decisions and orders. If an entity consents to supervisory
designation, under the procedures as amended there is no decision or
order issued by the Director that is eligible for public release.
However, if it exercises its statutory right to contest designation,
that choice may ultimately result in a public decision and order
asserting that the entity ``is engaging, or has engaged, in conduct
that poses risks to
[[Page 46037]]
consumers.'' \8\ Because businesses are concerned about their public
reputations, this procedural disparity may put inappropriate pressure
on entities to consent to designation, even when they have good
arguments that designation is unwarranted. The Bureau also requested
comment on the impact of public release on supervised entities and the
supervisory process. With respect to other changes made by the
amendments, the Bureau's preliminary view subject to considering
comments is that they were largely unnecessary.
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\8\ 12 U.S.C. 5514(a)(1)(C).
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Comments
A trade association representing the U.S. business community, a
trade association of financial technology firms, and a trade
association whose members include installment lenders submitted
comments opposing any public release of decisions and orders.
Accordingly, they supported the Bureau's proposed rescission. All three
of these trade associations cited unfair reputational harm from public
release. Two associations identified a risk to competition, because
firms that contest designation may be competitively disadvantaged by a
public order compared to firms that consent to designation and so are
not the focus of a public order. Also, if a published order raises
concerns about a particular type of product, competitors may be more
hesitant to enter into the market and risk being labeled as an entity
whose products pose a risk to consumers. The same two associations also
argued that public release is inconsistent with supervisory
confidentiality and harms the supervisory relationship between the
Bureau and the entity.\9\
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\9\ One association also requested that the Bureau codify a
provision that states that the Bureau will not publish decisions and
orders. The Bureau notes that, because of Sec. 1091.115(c) of the
proposed and final rules, the Bureau is required to treat decisions
and orders as confidential supervisory information under the
Bureau's confidentiality rules, and the Bureau does not consider any
further amendment on this subject to be necessary.
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Two trade associations representing the banking industry submitted
a comment opposing public release of decisions and orders, but instead
recommended public release of the names of designated nonbank entities.
These two associations argued that supervisory confidentiality is
important because it encourages candid communication between an
entity's management, an entity's board of directors, and the
supervising agency. Public release discourages entities from fully and
freely responding to a potential designation because information shared
in the response could be included in a published decision and order.
The associations also argued that, because decisions and orders are
issued at a preliminary stage before the Bureau's supervisory
examination, there will be uncertainty about whether the Bureau would
ultimately find that the conduct described in the decision and order
violates the law. This uncertainty could discourage conduct that the
Bureau ultimately would not deem illegal, including innovative ways of
designing and delivering financial services. According to the two
banking trade associations, by instead publishing a list of designated
nonbank entities, the Bureau would provide transparency to the public
and to other market participants about which nonbanks are subject to
Bureau supervision, without causing the harms from publishing decisions
and orders.
Two consumer advocacy organizations, an individual commenter, and
an anonymous commenter favored public release and opposed the proposed
rescission. According to one organization, the current procedure helps
the market, other financial firms, and the public better understand why
the Bureau chose to proceed with a risk-designation for that nonbank,
in a way that protects confidential information, trade secrets, and
other sensitive private information. According to another organization,
without transparency, the public cannot meaningfully evaluate whether
the Bureau is fulfilling its mandate, and it would also deny consumers
access to information about conduct by entities that could be important
to their financial well-being. The organization argued that the current
system does not unfairly penalize entities that contest designation
because a decision and order is the product of a formal administrative
process. If the Bureau nevertheless changes the current system, this
organization argued that it should consider the following alternatives:
offering clearer guidance on the threshold for public disclosure;
allowing limited redactions to protect sensitive information in
specific circumstances; or providing additional due process protections
for entities facing public orders. An individual commenter argued that
withholding decisions and orders from publication would obscure the
Bureau's statutory work from the public and invite litigation by
advocates of public disclosure against the Bureau. Finally, an
anonymous commenter argued that the public has a right to know which
entities are being supervised and why; that the possibility of public
disclosure should not be viewed as coercive but as a natural
consequence of engaging in a public regulatory process; and that there
is no evidence that the current rules have caused harm.
Final Rule
After considering the comments, the Bureau is restoring the 2013
rule's treatment of decisions and orders in supervisory designation
proceedings as confidential supervisory information. As the proposed
rule explained, the 2022-2024 rules can create a strong incentive for
respondents to consent to designation in order to avoid a public
decision and order discussing alleged risks to consumers from
respondents, even in situations where a respondent may have meritorious
responses to the initiating official's notice of reasonable cause. In
the Bureau's experience, the financial services industry is highly
focused on reputational concerns. The public interest is not served if
the Bureau designated entities that ought not be designated but accede
to designation out of fear of reputational harm. The Bureau notes that
this harm could still arise if the Bureau publishes a list of
designated nonbank entities, as the banking industry commenters
advocated, and the reputational impact might even be greater because
the reasons for the Bureau's designations would be unclear to the
public and subject to speculation.
The Bureau's concern about reputational pressure leading to
unmeritorious designations is not outweighed by interests in
disclosure. A supervisory designation proceeding has a limited purpose
of answering the threshold question of whether or not an entity should
be subject to supervision, based on limited evidentiary material,
because the Bureau has not yet engaged in supervision of the entity.
Its purpose is not to guide the substantive conduct of other market
participants or consumers, and so the Bureau does not accept comments
arguing that the Bureau should publish decisions and orders for those
purposes. The Bureau does recognize that the April 2022 and November
2022 rules placed weight on a different benefit of public release,
which was transparency about Bureau decisionmaking. However, the Bureau
is concerned that the redactions to decisions and orders that are
necessary to protect the confidentiality of future Bureau supervisory
activity, personal privacy, and commercial information can risk
rendering the redacted decisions and orders potentially misleading to
readers, by leaving an incomplete impression of the basis for
[[Page 46038]]
the designation.\10\ Separately, because the large majority of
respondents have historically voluntarily consented, the ability of the
public to use decisions and orders from the minority of contested cases
to understand the Bureau's supervision program is limited. Overall, the
Bureau believes that the harm from publication outweighs the benefits.
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\10\ The November 2022 rule predicted that redactions about the
entity's potential violations of law and potential compliance
management deficiencies, which are necessary to protect the
confidentiality of future supervisory activity at the entity, would
not be needed in most decisions and orders. 87 FR at 70704. However,
this has not been the Bureau's experience in practice.
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Finally, the Bureau recognizes that the April 2022 and November
2022 rules invoked the parties' ability to cite published decisions and
orders from past proceedings as a benefit of public release, promoting
consistency and predictability. However, the Bureau has concluded that
a better means of ensuring consistency and predictability is a
rulemaking in which all stakeholders can provide public comments, to
better define the legal standard applicable to supervisory designation
proceedings. The Bureau has separately published a notice of proposed
rulemaking to consider such a rule.\11\
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\11\ 90 FR 41520 (proposed Aug. 26, 2025).
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B. Other Issues
The proposed rule stated that, with respect to other changes made
by the 2022-2024 rules, the Bureau's preliminary view subject to
considering comments was that they were largely unnecessary. Commenters
did not provide specific comments on these other changes made by the
2022-2024 rules.
The final rule rescinds the 2022-2024 rules and reinstates the 2013
rule, with the following limited adjustments. The 2024 rule removed the
role of the Associate Director of SEFL in providing a recommended
determination before the Director makes a final determination, on the
grounds that position no longer existed at the Bureau due to a 2024
reorganization. This final rule reinstates recommended determinations,
to be made by a ``recommending official'' designated by the
Director.\12\ The Bureau believes that a recommended determination will
enhance the Bureau's deliberative process by providing the Director
with additional analysis.
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\12\ 12 CFR 1091.108 and generally pt. 1091, subpt. B.
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The Bureau is also retaining the following process adjustments made
by the 2024 rule: (a) a provision authorizing the initiating official
to file a written reply to the respondent's written response, which
helps provide the respondent with fair notice of points the initiating
official might subsequently raise orally during the ``supplemental oral
response''; \13\ (b) an option for the recommending official to direct
that the supplemental oral response be conducted by video, as a third
alternative alongside telephonic and in-person options under the 2013
rule; \14\ (c) provisions that codify the possibility of additional
supplemental briefing from the parties, which can help ensure that the
recommending official and Director have full information and that
respondents have a fair opportunity to respond to new issues; \15\ (d)
simplification of the provisions governing the mechanics of voluntary
consent agreements, which led to some confusion under the 2013 rule;
\16\ and (e) a nomenclature update to the definition of ``initiating
official,'' in order to reflect a 2024 reorganization that replaced the
two former ``Assistant Directors for Supervision'' with the
``Supervision Director.'' \17\ Unlike other changes made the 2022-2024
rules, the Bureau believes these limited changes simplify and clarify
the process, and contribute to a more fair and effective process.
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\13\ 12 CFR 1091.105(f).
\14\ 12 CFR 1091.103(a)(2)(iii), 1091.105(b)(3), 1091.106(b)(1).
\15\ 12 CFR 1091.108(g) 1091.109(f).
\16\ 12 CFR 1091.103(b), 1091.110.
\17\ 12 CFR 1091.102.
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The Bureau is not retaining any of the other changes made by the
2024 rules, including: changes to the elements in a notice of
reasonable cause; a provision stating that notices of reasonable cause
can be withdrawn; changes regarding time limits, word limits, and
methods of service; provisions governing proceedings with multiple
respondents; and issue exhaustion provisions. The Bureau concludes that
these provisions either added unnecessary complexity to the procedures
or in some cases were unnecessary because they were implicit in the
2013 rule.
IV. Section 1022(b)(2) Analysis
In developing this rule, the Bureau has considered its benefits,
costs, and impacts in a manner consistent with section 1022(b)(2)(A) of
the CFPA.\18\ In addition, the Bureau has consulted with the prudential
regulators and the Federal Trade Commission, including regarding
consistency of the rule with any prudential, market, or systemic
objectives administered by those agencies, in a manner consistent with
section 1022(b)(2)(B) of the CFPA.\19\
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\18\ 12 U.S.C. 5512(b)(2)(A).
\19\ 12 U.S.C. 5512(b)(2)(B). In order to inform the rulemaking
more fully the Bureau performed the described analysis and
consultations.
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There are generally limited data with which to quantify potential
costs, benefits, and impacts of the final rule. The Bureau has
conducted a limited number of supervisory designation proceedings under
the existing rules, but the Bureau does not have quantitative data
regarding the costs to respondents or other impacts of those
proceedings. The Bureau also lacks comprehensive data that would allow
quantification of any reputational costs associated with potential
publication of a supervisory designation order or to assess costs
associated with how such a public release may impact the supervisory
process. Commenters also did not provide quantitative data in their
comments.
In light of these data limitations, the analysis below generally
provides a qualitative discussion of the benefits, costs and impacts of
the final rule. General economic principles and the Bureau's experience
and expertise in consumer financial markets, together with the limited
data that are available, provide insight into these benefits, costs,
and impacts.
In evaluating the benefits, costs, and impacts of the final rule,
the Bureau considers the impacts against a baseline that includes the
legal and procedural framework that currently exists regarding
supervisory designation proceedings for nonbank covered persons; that
is, the existing regulation as amended by the 2022-2024 rules.
The final rule would apply to covered persons as defined in the
CFPA, which are generally entities that engage in offering or providing
a consumer financial product or service. There is a large population of
firms potentially affected by this final rule.\20\ The Bureau does not
currently have access to comprehensive data on the number of nonbank
covered persons that may be subject to supervisory authority. To
establish an estimate of the population of nonbank covered entities
potentially subject to the final rule, the Bureau uses
[[Page 46039]]
publicly available data from the 2022 Economic Census (the most recent
version currently available), which provides counts of firms by North
American Industry Classification System (NAICS) industry codes.\21\
Based on the 2022 Economic Census data for NAICS codes that align with
financial services,\22\ the Bureau estimates there are approximately
154,430 entities in these covered industries. It should also be noted
that this estimate does not include other nonbank covered entities not
categorized in one of the enumerated industries, e.g., if consumer
financial services are not their primary business activity. To date,
the Bureau has exercised its supervisory authority under 12 CFR part
1091 over fewer than 20 covered entities.\23\
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\20\ The procedures in the existing 12 CFR part 1091 are only to
assess whether a nonbank covered person will be made subject to the
Bureau's supervisory authority based on a determination under
section 1024(a)(1)(C) of the CFPA, 12 U.S.C. 5514(a)(1)(C). In
general, there is no reason to make a determination under section
1024(a)(1)(C) with respect to a nonbank covered entity subject to
the Bureau's supervisory authority under some other provision of
section 1024(a) of the CFPA, 12 U.S.C. 5514(a). However, this is
possible. Therefore, the Bureau does not exclude from its analysis
nonbank covered entities that may be subject to supervision under a
separate provision of section 1024(a).
\21\ U.S. Census Bureau, ``2022 Economic Census,'' https://www.census.gov/programs-surveys/economic-census/year.2022.html
(accessed August 18, 2025).
\22\ The relevant NAICS codes examined are 5222 (Nondepository
credit intermediation); 5223 (Activities related to credit
intermediation); 523940 (Portfolio management and investment
advice); 532112 (Passenger car leasing); 532120 (Truck, utility
trailer, and recreational vehicle rental and leasing); 5313
(Activities related to real estate); 561450 (Consumer reporting);
and 561440 (Debt collection). Four-digit industry codes are used for
broad industries that are likely to be entirely made up of firms
that are subject to this rule whereas six-digit industry codes are
used for narrower industries when the broad classification is likely
to include firms not subject to this rule.
\23\ The Bureau's designations of Google Payment Corp., which
formerly provided a peer-to-peer payment product, and World
Acceptance Corp., which is an installment lender, have been publicly
disclosed.
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The final rule makes two major changes relative to the existing
regulation in the procedure for designating covered entities for
supervision.\24\ First, it reinstates recommended determinations, to be
made by a ``recommending official'' designated by the Director,\25\
which was formerly performed by the Associate Director of SEFL. The
2024 amendment eliminated the role of the Associate Director of SEFL in
supervisory designation proceedings, on the grounds that the position
no longer existed at the Bureau due to a 2024 reorganization.
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\24\ Separately, the Bureau is considering amending 12 CFR 1091
to explicitly address the meaning of ``risks to consumers,'' see 90
FR 41520 (proposed Aug. 26, 2025).
\25\ 12 CFR 1091.108 and generally pt. 1091, subpt. B.
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The final rule reinstates a role for a recommending official, who
is the recipient of any written response, reply, and supplemental oral
response, may request a supplemental briefing, and drafts a recommended
determination for the Director. After this, the Director considers the
materials and recommended determination and may request a supplemental
briefing or consult with decisional employees, and makes a final
determination to accept, modify, or reject the recommending official's
recommendation.
Relative to the 2024 rule, the final rule could extend the timeline
of the supervisory designation process in contested proceedings given
that both the recommending official and Director must consider the
matter. Under both the 2024 rule and the final rule, a respondent who
opts for contested proceedings would provide a written response and
have the option to request a supplemental oral response. After this,
under the final rule the recommending official may request a
supplemental briefing and, after the recommending official makes their
recommendation to the Director, the Director may request a supplemental
briefing. In contrast, under the 2024 rule, after the optional
supplemental oral response, only the Director may request a
supplemental briefing. There is a possibility that, under the final
rule, the recommending official might request some supplemental
briefing from the respondent that the Director would not have chosen to
request as sole decisionmaker under the 2024 rule, if the recommending
official has a different perspective than the Director about what
information should be considered. To the extent respondents are asked
to prepare additional supplemental briefing, that could hypothetically
represent an increase in cost for the respondent, although the Bureau
does not have reason to think that increased supplemental briefing will
be common. If it arises, the additional supplemental briefing could
contribute to enhancing the Bureau's decisionmaking as noted below,
which could ultimately benefit respondents.
The final rule could increase the information available to
respondents, since it requires both a recommended determination and a
final determination and associated rationale be made available to the
respondent. This could increase respondents' insight into the Bureau's
decision-making process, which could benefit respondents insofar as it
clarifies the risk assessment the Bureau undertakes in supervisory
designation procedures.\26\
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\26\ Due to the second major change outlined below, the
rescission of the Director's option to publish a version of orders
after contested proceedings, these benefits would be limited to only
the respondent and not other covered persons.
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The final rule would provide the Director with additional analysis
from the recommending official prior to making a final
determination.\27\ In some cases, as noted above, the recommending
official's analysis may be informed by supplemental briefing that the
Director would not have requested if the Director were the sole
decisionmaker. But the Bureau also believes a recommended determination
will be beneficial when there is no supplemental briefing. The Bureau
believes that a recommended determination will enhance the Bureau's
deliberative process. Mandating the consultation of at least one other
employee could have an ambiguous impact on covered persons in contested
proceedings. The recommending official and Director could have
different interpretations of the evidence which may affect whether the
Director finds a reasonable basis for a supervisory designation,
depending on the particulars of the case. It is possible that in
situations where the evidence presented for supervisory designation is
not clear cut, mandating the Director to consider at least one other
official's analysis may increase the likelihood of designation in cases
where conduct poses risks to consumers while also decreasing the
likelihood of designation in cases where no risk exists, which would
generally benefit both consumers and covered persons; that is, it may
decrease the probability of both ``false positives'' and ``false
negatives'' in the supervisory designation process. It should be noted,
however, that under the current and final rule the Director may consult
with other decisional employees in coming to a final determination.
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\27\ Under the current rule, the Director has the option to
consult with decisional employees, an option the Director retains
under the new rule. The new rule mandates that the designated
recommending official submit a recommendation and associated
reasoning to the Director for consideration. In both scenarios, the
Director ultimately retains the power to accept, reject, or modify
any recommendations the Director may receive.
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The second major change is the elimination of the power for the
Director to determine whether to publicly release a supervisory
designation order. At the time of the 2022-2024 rules, the Bureau
believed that publication of orders may benefit covered persons by
allowing both respondents and the Bureau to rely on reasoning in prior
public orders as precedent in future contested proceedings and also
provide insight into the Bureau's decision-making process and risk
assessments. The Bureau believed this may benefit covered persons and
consumers by reducing uncertainty around the decision-making process
and risk
[[Page 46040]]
assessment the Bureau undertakes. The Bureau is also aware of arguments
from public comments that orders may benefit consumers by providing
information regarding particular potentially harmful practices by
covered persons that arguably could inform consumer behavior, although
that was not the intended purpose of publication and as discussed below
this potential benefit is likely limited. To the extent the above
effects materialized as benefits of the 2022-2024 rules, they would be
costs of this rule.
The Bureau now believes that the above benefits are limited. There
have only been two published orders under the 2022 rules, offering
limited insight to the public into the decision-making process and risk
assessment undertaken by the Bureau.\28\ Additionally, there is a risk
that the redactions to decisions and orders that are necessary to
protect the confidentiality of future Bureau supervisory activity,
personal privacy, and commercial information can risk rendering the
redacted decisions and orders potentially misleading to readers,
reducing the value of publication. Moreover, as emphasized by the
Bureau in the November 2022 rule,\29\ the finding of reasonable cause
in a supervisory designation proceeding does not mean there has been
any wrongdoing on the part of respondents. If consumers interpret
published orders as evidence of wrongdoing or a higher likelihood of
wrongdoing, then publishing orders may result in reputational costs for
respondents which could lead them to enter into consent agreements even
if they have a reasonable probability of a finding of no reasonable
cause for designation after contested proceedings or could lead them to
avoid entering into a consumer finance product market altogether.\30\
It is also possible that publishing orders may result in respondents
being less candid in their responses to the Notice of Reasonable
Cause.\31\
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\28\ 12 CFR 1091 proceedings have been initiated a limited
number of times, and fewer than ten percent of orders have been
published because the remainder were entered by consent.
\29\ See 87 FR at 70703.
\30\ The ability for respondents to enter a consent agreement
under the current rule mitigates this effect to a degree. Consider a
simple setting where firms enter a market if expected net benefits
of entry, b, exceed expected costs associated with a supervisory
designation process being started, q(min{p(s+c)+k,s{time} ), where q
is the probability the Bureau begins 1091 proceedings, p is the
probability reasonable cause is found in contested proceedings, s is
the cost of supervision which is assumed to be the same after
reasonable cause is found in contested proceedings or after a
consent agreement is entered, c is reputational cost associated with
a public order, and k is the cost of entering into contested
proceedings. Firms that will be induced to enter a market by the
proposed rule eliminating costs c would have an expected net benefit
of entering into a market q(ps+k)<=b<=qmin{p(s+c)+k,s{time} . That
is, their expected benefits must exceed the expected costs
associated with contested proceedings under the new rule but be less
than the minimum of expected costs associated with contested
proceedings under the new rule and the expected costs associated
with supervision after a consent agreement. This model makes many
simplifying assumptions, but the intuition here is that firms with
expected benefits that exceed expected supervisory costs but are
less than expected costs associated with contested proceedings under
the current rule are not marginal firms when considering entry,
since they may already opt for a consent agreement to avoid any
expected reputational costs.
\31\ Note that this effect is likely mitigated by provisions in
the current rule that prohibit publication of any materials that are
exempt from disclosure by 5 U.S.C. 552(b)(4) or (b)(6).
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Ultimately, due to the limited number of times the Bureau has
initiated supervisory designation proceedings, the limited number of
public orders, and the lack of data on costs associated with contested
hearing, reputational costs, supervisory costs and how they are
affected by relations between the Bureau and covered persons, and
benefits associated with a public record of orders, the Bureau is
unable to quantify the relevant benefits and costs associated with the
proposed rule to a reasonable degree of certainty. Although not
quantifiable, as discussed earlier in this preamble, the Bureau's
judgment is that the harm from publication is more compelling as a
policy matter than the benefits.
This final rule will not have an impact on insured depository
institutions or insured credit unions with $10 billion or less in
assets as described in section 1026(a) of the CFPA.\32\ Nor will the
final rule have a unique impact on rural consumers.
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\32\ 12 U.S.C. 5516(a).
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V. Executive Order 12866
The Office of Information and Regulatory Affairs within the Office
of Management and Budget (OMB) has determined that this action is not a
``significant regulatory action'' under Executive Order 12866, as
amended.\33\
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\33\ Section 3(f) of Executive Order 12866 defines a
``significant regulatory action'' as any regulatory action that is
likely to result in a rule that may: (1) have an annual effect on
the economy of $100 million or more or adversely affect in a
material way the economy, a sector of the economy, productivity,
competition, jobs, the environment, public health or safety, or
State, local, or tribal governments or communities; (2) create a
serious inconsistency or otherwise interfere with an action taken or
planned by another agency; (3) materially alter the budgetary impact
of entitlements, grants, user fees, or loan programs or the rights
and obligations of recipients thereof; or (4) raise novel legal or
policy issues arising out of legal mandates, or the President's
priorities.
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VI. Other Regulatory Requirements
This is a rule of agency organization, procedure, or practice, and,
therefore, exempt from the notice-and-comment rulemaking requirements
of the Administrative Procedure Act.\34\ However, the Bureau accepted
comments on the rule and is issuing this rule after considering those
comments.
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\34\ 5 U.S.C. 553(b).
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Because no notice of proposed rulemaking is required, the
Regulatory Flexibility Act does not require an initial or final
regulatory flexibility analysis.\35\ Moreover, the Bureau's Director
certifies that this rule will not have a significant economic impact on
a substantial number of small entities. Therefore, an analysis is also
not required on that basis.\36\ This is because the number of entities
that will be subject to supervisory designation proceedings is small,
and within that group the number that would be small entities is likely
to be either none or in the single digits each year, representing a
very small fraction of small entities in the relevant consumer finance
markets.
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\35\ 5 U.S.C. 603, 604.
\36\ 5 U.S.C. 605(b).
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The Bureau has determined that this rule does not contain any new
or substantively revised information collection requirements that would
require approval by OMB under the Paperwork Reduction Act.\37\
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\37\ 44 U.S.C. 3501-3521.
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In an abundance of caution, pursuant to the Congressional Review
Act,\38\ the Bureau will submit a report containing this rule and other
required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to the rule taking effect. OMB has designated this rule as not a
``major rule'' as defined by 5 U.S.C. 804(2).
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\38\ 5 U.S.C. 801 et seq.
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List of Subjects in 12 CFR Part 1091
Administrative practice and procedure, Consumer protection, Credit,
Trade practices.
Authority and Issuance
0
As discussed above, the Bureau revises 12 CFR part 1091 to read as
follows:
PART 1091--PROCEDURES FOR SUPERVISORY DESIGNATION PROCEEDINGS
Sec.
Subpart A--General
1091.100 Scope and purpose.
1091.101 Definitions.
[[Page 46041]]
Subpart B--Determination and Voluntary Consent Procedures
1091.102 Issuance of Notice of Reasonable Cause.
1091.103 Contents of Notice.
1091.104 Service of Notice.
1091.105 Response.
1091.106 Supplemental oral response.
1091.107 Manner of filing and serving papers.
1091.108 Recommended determination.
1091.109 Determination by the Director.
1091.110 Voluntary consent to Bureau's authority.
1091.111 Notice and response included in adjudication proceeding
otherwise brought by the Bureau.
1091.112 No limitation on relief sought in civil action or
administrative adjudication.
Subpart C--Post-Determination Procedures
1091.113 Petition for termination of order.
Subpart D--Time Limits and Deadlines
1091.114 Construction of time limits.
1091.115 Change of time limits and confidentiality of proceedings.
Authority: 12 U.S.C. 5512(b)(1), 5514(a)(1)(C), 5514(b)(7).
Subpart A--General
Sec. 1091.100 Scope and purpose.
This part sets forth procedures to implement section 1024(a)(1)(C)
of the Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010, Public Law 111-203 (12 U.S.C. 5514(a)(1)(C)) (Dodd-Frank Act),
and establishes rules to facilitate the Bureau's supervisory authority
over certain nonbank covered persons pursuant to section 1024(b)(7) of
the Dodd-Frank Act (12 U.S.C. 5514(b)(7)).
Sec. 1091.101 Definitions.
For the purposes of this part, the following definitions apply:
Bureau means the Consumer Financial Protection Bureau.
Consumer means an individual or an agent, trustee, or
representative acting on behalf of an individual.
Consumer financial product or service means any financial product
or service, as defined in 12 U.S.C. 5481(15), that is described in one
or more categories under:
(1) 12 U.S.C. 5481(15) and is offered or provided for use by
consumers primarily for personal, family, or household purposes; or
(2) Clause (i), (iii), (ix), or (x) of 12 U.S.C. 5481(15)(A) and is
delivered, offered, or provided in connection with a consumer financial
product or service referred to in paragraph (1) of this definition.
Decisional employee means any employee of the Bureau who has not
engaged in:
(1) Assisting the initiating official in either determining whether
to issue a Notice of Reasonable Cause, or presenting the initiating
official's position in support of a Notice of Reasonable Cause, either
in writing or in a supplemental oral response, to the recommending
official; or
(2) Assisting the recommending official in the preparation of a
recommended determination.
Director means the Director of the Bureau or his or her designee.
If there is no Director, the term shall mean a person authorized to
perform the functions of the Director under this part, or his or her
designee.
Executive Secretary means the Executive Secretary of the Bureau.
Initiating official means the Supervision Director or another
Bureau employee designated by the Director to initiate proceedings
under this part.
Nonbank covered person means, except for persons described in 12
U.S.C. 5515(a) and 5516(a):
(1) Any person that engages in offering or providing a consumer
financial product or service; and
(2) Any affiliate of a person described in paragraph (1) of this
definition if such affiliate acts as a service provider to such person.
Notice of Reasonable Cause and Notice mean a Notice issued under
Sec. 1091.102.
Person means an individual, partnership, company, corporation,
association (incorporated or unincorporated), trust, estate,
cooperative organization, or other entity.
Recommending official means an employee designated by the Director
to make a recommended determination under this part.
Respondent means a person who has been issued a Notice of
Reasonable Cause under Sec. 1091.102.
Response means the response to a Notice of Reasonable Cause filed
by a respondent with the recommending official under Sec. 1091.105.
Subpart B--Determination and Voluntary Consent Procedures
Sec. 1091.102 Issuance of Notice of Reasonable Cause.
(a) An initiating official is authorized to issue a Notice of
Reasonable Cause to a person stating that the Bureau may have
reasonable cause to determine that the respondent is a nonbank covered
person that is engaging, or has engaged, in conduct that poses risks to
consumers with regard to the offering or provision of consumer
financial products or services.
(b) A Notice of Reasonable Cause shall be based on:
(1) Complaints collected through the system under 12 U.S.C.
5493(b)(3); or
(2) Information from other sources.
(c) Except as provided in Sec. 1091.111, a Notice of Reasonable
Cause shall contain the information set forth in Sec. 1091.103, and be
served on respondent as described in Sec. 1091.104.
Sec. 1091.103 Contents of Notice.
(a) A Notice of Reasonable Cause shall contain the following:
(1) A description of the basis for the assertion that the Bureau
may have reasonable cause to determine that a respondent is a nonbank
covered person that is engaging, or has engaged, in conduct that poses
risks to consumers with regard to the offering or provision of consumer
financial products or services, including a summary of the documents,
records, or other items relied on by the initiating official to issue a
Notice. Such summary will be consistent with the protection of
sensitive information, including compliance with Federal privacy law
and whistleblower protections; and
(2) A statement informing a respondent that:
(i) A respondent may file with the recommending official a written
response to a Notice of Reasonable Cause no later than 30 days after
the Notice is served on the respondent;
(ii) The written response shall include the elements addressed in
Sec. 1091.105(b);
(iii) A respondent may request in its written response to a Notice
an opportunity to present a supplemental oral response to the
recommending official as set forth in Sec. 1091.106, including its
preference that the supplemental oral response be by telephone, by
video conference, or in person at the Bureau's headquarters in
Washington, DC;
(iv) A failure timely to file a response to a Notice shall
constitute a waiver of a respondent's right to respond, and may result
in a default determination by the Director, based on the Notice, that a
respondent is a nonbank covered person that is engaging, or has
engaged, in conduct that poses risks to consumers with regard to the
offering or provision of consumer financial products or services and
the issuance of a decision and order subjecting a respondent to the
Bureau's supervisory authority pursuant to 12 U.S.C. 5514(a)(1)(C);
(v) The recommending official shall serve a respondent with a
notice of the date and time of a supplemental oral response, if a
respondent has requested the opportunity to present a supplemental oral
response, within 14
[[Page 46042]]
days of the recommending official's receipt of a timely-filed response;
(vi) If a respondent has not requested the opportunity to present a
supplemental oral response, the recommending official shall, not later
than 45 days after receiving a timely-filed response, or not later than
45 days after the service of a Notice of Reasonable Cause when a
respondent fails to file a timely response, provide a recommended
determination to the Director including either a proposed decision and
order subjecting a respondent to the Bureau's supervisory authority
pursuant to 12 U.S.C. 5514(a)(1)(C), or a proposed notification that
the Bureau has determined not to subject a respondent to the Bureau's
supervisory authority at that time, pursuant to Sec. 1091.108; and
(vii) In connection with a proceeding under this part, including a
petition for termination under Sec. 1091.113, all documents, records
or other items submitted by a respondent to the Bureau, all documents
prepared by, or on behalf of, or for the use of the Bureau, and any
communications between the Bureau and a person, shall be deemed
confidential supervisory information under 12 CFR 1070.2(i).
(b) A Notice shall be accompanied by a proposed consent agreement
under Sec. 1091.110.
(c) Nothing in this section shall be construed as requiring the
Bureau to produce any documents or other information to a respondent
other than as set forth in this section.
Sec. 1091.104 Service of Notice.
(a) A Notice of Reasonable Cause shall be served on a respondent as
follows:
(1) To individuals. A Notice shall be served on a respondent that
is a natural person by delivering a copy of the Notice to the
individual or to an agent authorized by appointment or by law to
receive such a Notice. Delivery, for purposes of this paragraph, means
handing a copy of a Notice to the individual; or leaving a copy at the
individual's office with a clerk or other person in charge thereof; or
leaving a copy at the individual's dwelling house or usual place of
abode with some person of suitable age and discretion then residing
therein; or sending a copy of a Notice addressed to the individual
through the U.S. Postal Service by Registered Mail, Certified Mail or
Express Mail delivery, or by third-party commercial carrier, for
overnight delivery and obtaining a confirmation of receipt.
(2) To corporations or entities. Notice shall be served on a person
other than an individual by delivering a copy of a Notice to an
officer, managing or general agent, or any other agent authorized by
appointment or law to receive such a Notice, by any method specified in
paragraph (a)(1) of this section.
(3) Upon persons registered with the Bureau. In addition to any
other method of service specified in paragraph (a)(1) or (2) of this
section, Notice may be served on a person registered with the Bureau by
sending a copy of a Notice addressed to the most recent business
address shown on the person's registration form by U.S. Postal Service
Certified, Registered, or Express Mail and obtaining a confirmation of
receipt or attempted delivery.
(4) Upon persons in a foreign country. Notice may be served on a
person in a foreign country by any method specified in paragraph (a)(1)
or (2) of this section, or by any other method reasonably calculated to
give notice, provided that the method of service used is not prohibited
by the law of the foreign country.
(5) Record of service. The Bureau shall maintain a record of
service of a Notice on a respondent, identifying the party given
Notice, the method of service, the date of service, the address to
which service was made, and the person who made service. If service is
made in person, the certificate of service shall state, if available,
the name of the individual to whom a Notice was given. If service is
made by U.S. Postal Service Registered Mail, Certified Mail, or Express
Mail, the Bureau shall maintain the confirmation of receipt or
attempted delivery.
(6) Waiver of service. In lieu of service as set forth in paragraph
(a)(1) or (2) of this section, a person may be provided a copy of a
Notice by First Class Mail or other reliable means if a written waiver
of service is obtained from the person to be served. In the case of a
respondent that is not a natural person, a written waiver may be
provided by an officer, managing or general member, or partner
authorized to represent the respondent.
(b) The initiating official shall promptly submit a copy of a
Notice and a copy of the certificate of service to the recommending
official.
Sec. 1091.105 Response.
(a) Timing. Within 30 days of service of a Notice, a respondent
shall file any response with the recommending official according to the
instructions set forth in a Notice.
(b) Content of the response. (1) The response shall set forth the
basis for a respondent's contention that the respondent is not a
nonbank covered person that is engaging, or has engaged, in conduct
that poses risks to consumers with regard to the offering or provision
of consumer financial products or services.
(2) The response shall include all documents, records, or other
evidence a respondent wishes to use to support the arguments or
assertions set forth in the response.
(3) Any request to present a supplemental oral response, including
the respondent's preference that the supplemental oral response be by
telephone, by video conference, or in person at the Bureau's
headquarters in Washington, DC, must be included in the response. A
respondent's failure to request to present a supplemental oral response
shall constitute a waiver of the opportunity to present a supplemental
oral response.
(4) A response shall include an affidavit or declaration, made by
the individual respondent if a natural person, or, if a corporate or
other entity that is not a natural person, by an officer, managing or
general member, or partner authorized to represent the respondent,
affirming that the response is true and accurate and does not contain
any omissions that would cause the response to be materially
misleading.
(5) Notwithstanding any other provisions of this paragraph (b), a
respondent may respond to a Notice of Reasonable Cause by voluntarily
consenting to the Bureau's authority to supervise the respondent under
12 U.S.C. 5514 by completing and executing the consent agreement form
provided to the respondent with a Notice of Reasonable Cause in
accordance with Sec. 1091.103(b).
(c) Default. Failure of a respondent to file a response within the
time period set forth in paragraph (a) of this section shall constitute
a waiver of the respondent's right to respond, and shall, based on the
Notice, authorize the recommending official, without further notice to
the respondent, to issue a proposed decision and order as provided in
Sec. 1091.108(c)(1) and the Director to issue a decision and order as
provided in Sec. 1091.109(a)(1).
(d) Waiver. A respondent shall be deemed to have waived the right,
at any future stage of the recommending official's or the Director's
consideration of a matter, and in any petition for judicial review of
an order issued pursuant to Sec. 1091.109(a)(1), to rely on any
argument, record, document, or other information that the respondent
does not raise or include in its response.
(e) No discovery. There shall be no discovery in connection with a
response.
[[Page 46043]]
(f) Reply by initiating official. If the respondent files a written
response, within 21 days the initiating official may file a reply with
the recommending official and serve it on the respondent.
Sec. 1091.106 Supplemental oral response.
(a) A respondent may request in a response under Sec. 1091.105 the
opportunity to present to the recommending official a supplemental oral
response in support of a respondent's assertion that the respondent is
not a nonbank covered person that is engaging, or has engaged, in
conduct that poses risks to consumers with regard to the offering or
provision of consumer financial products or services.
(b) The conduct of a supplemental oral response shall be subject to
the following procedures:
(1) The recommending official will determine whether the
supplemental oral response will be by telephone, by video conference,
or in person at the Bureau's headquarters in Washington, DC, after
considering the preference of the respondent stated in the written
response;
(2) The recommending official may impose any limitations on the
conduct of a supplemental oral response, including but not limited to
establishing a time limit for the presentation of a supplemental oral
response, and limiting the subjects to be addressed in a supplemental
oral response;
(3) There shall be no discovery permitted or witnesses called in
connection with a supplemental oral response;
(4) If a respondent is a corporate or other entity, and not a
natural person, the respondent shall be represented in any supplemental
oral response by:
(i) An officer, managing or general member, or partner authorized
to represent the respondent; or
(ii) An attorney in good standing of the bar of the highest court
of any State.
(5) If a respondent is a natural person, the respondent shall be
represented in any supplemental oral response by:
(i) Himself or herself; or
(ii) An attorney in good standing of the bar of the highest court
of any State.
(6) The recommending official shall cause an audio recording of a
supplemental oral response to be made by a court reporter. A respondent
may purchase a copy or transcript of the recording at the respondent's
own expense.
(c) The initiating official may participate in any supplemental
oral response conducted under this section.
(d) The Associate Director shall serve on a respondent, within 14
days after the Associate Director receives the respondent's timely-
filed response requesting a supplemental oral response, a notice
setting forth the date, time, and general information relating to the
conduct of a supplemental oral response. The date of a supplemental
oral response shall be scheduled not less than ten days after the date
the respondent is served with the notice of supplemental oral response.
(e) The notice of supplemental oral response shall be served on a
respondent pursuant to Sec. 1091.107.
(f) The recommending official shall send a copy of the notice of
supplemental oral response to the initiating official.
(g) A respondent's failure to participate in a supplemental oral
response scheduled by the recommending official shall constitute the
respondent's waiver of the opportunity to present a supplemental oral
response.
Sec. 1091.107 Manner of filing and serving papers.
Unless otherwise specified by the recommending official or
Director, a respondent shall file the response and any other paper with
the Executive Secretary at the mailing or electronic address provided
by the Bureau, and the initiating official, recommending official, and
Director shall serve any paper, other than a Notice as set forth in
Sec. 1091.104, on a respondent, by:
(a) Electronic transmission upon any condition specified by the
recommending official or Director; or
(b) Any of the following methods if a respondent demonstrates
electronic filing is not practicable and the recommending official or
Director permits:
(1) Personal delivery;
(2) Delivery through a reliable commercial courier service or
overnight delivery service; or
(3) Mailing the papers by U.S. Postal Service First Class,
Registered, Certified, or Express Mail.
Sec. 1091.108 Recommended determination.
(a) If a respondent did not voluntarily consent to the Bureau's
supervision authority, and did not request the opportunity to present a
supplemental oral response, not later than 45 days after receipt of a
timely-filed response, or not later than 45 days after the service of a
Notice of Reasonable Cause when a respondent fails to file a timely
response, the recommending official shall make a recommended
determination whether there is reasonable cause for the Bureau to
determine that the respondent is a nonbank covered person that is
engaging, or has engaged, in conduct that poses risks to consumers with
regard to the offering or provision of consumer financial products or
services which should result in an order subjecting the respondent to
the Bureau's authority under 12 U.S.C. 5514(a)(1)(C).
(b) If a respondent did request the opportunity to present a
supplemental oral response, not later than 90 days after service of a
Notice of Reasonable Cause, the recommending official shall make a
recommended determination whether there is reasonable cause for the
Bureau to determine that the respondent is a nonbank covered person
that is engaging, or has engaged, in conduct that poses risks to
consumers with regard to the offering or provision of consumer
financial products or services which should result in an order
subjecting the respondent to the Bureau's authority under 12 U.S.C.
5514(a)(1)(C).
(c) Upon making the recommended determination described in
paragraph (a) or (b) of this section, the recommending official shall
submit to the Director either:
(1) A proposed decision and order that would subject a respondent
to the Bureau's supervisory authority pursuant to 12 U.S.C.
5514(a)(1)(C) if adopted by the Director; or
(2) A proposed notification that a respondent should not be
subjected to the Bureau's supervisory authority under 12 U.S.C.
5514(a)(1)(C) based on the proceedings. Such a notification shall have
no precedential effect and shall not prevent the issuance of another
Notice of Reasonable Cause pursuant to either Sec. 1091.102, or the
procedures set forth in Sec. 1091.111, at any time, or from issuance
of a decision and order based on another Notice recommending that a
respondent be subject to the Bureau's authority pursuant to either of
those sections.
(d) Any proposed decision and order issued by the recommending
official pursuant to paragraph (c)(1) of this section shall set forth:
(1) A statement that the recommending official has preliminarily
determined based on reasonable cause that a respondent is a nonbank
covered person that is engaging, or has engaged, in conduct that poses
risks to consumers with regard to the offering or provision of consumer
financial products or services;
(2) The basis for the recommending official's determination; and
(3) A proposed order directing that, pursuant to this
determination, as of a specified date a respondent shall be
[[Page 46044]]
subject to the Bureau's supervisory authority under 12 U.S.C. 5514.
(e) The recommending official shall include with the recommended
determination submitted to the Director copies of the following:
(1) The Notice of Reasonable Cause;
(2) The record of service of a Notice of Reasonable Cause;
(3) A respondent's response and any documents, records, or other
items filed with the written response;
(4) Any document, record, or other item considered by the
recommending official to be material in making a recommended
determination; and
(5) An audio recording of a supplemental oral response, if a
supplemental oral response was conducted, and/or a transcript if a
transcript was prepared at a respondent's request or if requested by
the Director.
(f) The requirement that the recommending official provide to the
Director the items described in paragraph (e) of this section shall
confer no substantive rights on a respondent and any omission of an
item may be cured by the recommending official to the extent
applicable.
(g) Supplemental briefing. The recommending official may, at any
time before making a recommended determination, request that the
respondent and initiating official provide any supplemental briefing
that the recommending official considers appropriate.
Sec. 1091.109 Determination by the Director.
(a) Not later than 45 days after receipt of the recommending
official's recommended determination, the Director shall, after
considering the recommended determination and all documents, records,
and other items submitted therewith by the recommending official, make
a determination either adopting without revision, modifying, or
rejecting the recommended determination, and shall issue to respondent,
with copies to the recommending official and the initiating official:
(1) A decision and order subjecting the respondent to the Bureau's
supervisory authority pursuant to 12 U.S.C. 5514(a)(1)(C); or
(2) A notification that the Director has determined that the
respondent is not subject to the Bureau's supervisory authority under
12 U.S.C. 5514(a)(1)(C) as a result of the proceedings. Such
notification shall have no precedential effect and shall not prevent
the issuance of another Notice of Reasonable Cause pursuant to either
Sec. 1091.102, or the procedures set forth in Sec. 1091.111, at any
time, or the issuance of an order based on another Notice subjecting
the respondent to the Bureau's authority pursuant to either of those
sections.
(b) Any decision and order issued by the Director pursuant to
paragraph (a)(1) of this section shall include:
(1) A statement that the Director adopts the recommending
official's proposed decision and order without revision as the
Director's decision and order, or that the Director rejects or modifies
the recommending official's proposed determination for reasons set
forth by the Director;
(2) A statement that the Director has determined that the Bureau
has reasonable cause to determine that a respondent is a nonbank
covered person that is engaging, or has engaged, in conduct that poses
risks to consumers with regard to the offering or provision of consumer
financial products or services;
(3) The basis for the Director's determination, which may be an
adoption of the basis set forth in the recommending official's proposed
decision;
(4) An order directing that, pursuant to this determination, as of
a specified date a respondent shall be subject to the Bureau's
supervisory authority under 12 U.S.C. 5514 and informing a respondent
that the respondent may petition for termination of the Bureau's
supervisory authority no sooner than two years from the date of the
order, and no more than annually thereafter; and
(5) A copy of the recommended determination issued by the
recommending official.
(c) Only decisional employees may advise and assist the Director in
the consideration and disposition of a proceeding under this part.
(d) A decision and order issued pursuant to paragraph (a)(1) of
this section shall constitute final agency action under 5 U.S.C. 704.
(e) Any item required to be served on a respondent under this
section shall be served pursuant to Sec. 1091.107.
(f) The Director may, at any time before making a determination,
request that the respondent and initiating official provide any
supplemental briefing that the Director considers appropriate.
Sec. 1091.110 Voluntary consent to Bureau's authority.
(a) At any time, a person and the initiating official may enter
into a consent agreement by which the person voluntarily consents to
the Bureau's supervisory authority under 12 U.S.C. 5514. The consent
agreement shall constitute an order authorized by 12 U.S.C.
5514(a)(1)(C).
(b) A consent agreement under this section does not constitute an
admission that a person is a nonbank covered person that is engaging,
or has engaged, in conduct that poses risks to consumers with regard to
the offering or provision of consumer financial products or services.
(c) A consent agreement may specify a period of time that the
person will be subject to the Bureau's authority under 12 U.S.C. 5514.
If the consent agreement specifies a period of time, it shall not be
eligible for a petition for termination pursuant to Sec. 1091.113. If
the consent agreement does not specify a period of time, the consent
agreement will continue until terminated pursuant to Sec. 1091.113.
(d) A consent agreement under this section shall state that the
person waives any right to judicial review of the consent agreement.
(e) The initiating official encloses a proposed consent agreement
with the Notice of Reasonable Cause under Sec. 1091.103(b).
Sec. 1091.111 Notice and response included in adjudication proceeding
otherwise brought by the Bureau.
(a) Notwithstanding Sec. Sec. 1091.102 through 1091.106, the
Bureau may, in its discretion, provide the notice and opportunity to
respond required by 12 U.S.C. 5514(a)(1)(C) in a notice of charges
otherwise brought by the Bureau pursuant to 12 CFR 1081.200 and the
adjudication proceedings pursuant to part 1081. Also, a person may
agree to submit to the Bureau's supervisory authority under 12 U.S.C.
5514(a)(1)(C) as part of a consent order entered into in connection
with an adjudication proceeding or civil action.
(b) If the Bureau chooses to proceed in the manner described in
paragraph (a) of this section, it shall so indicate in the notice of
charges, and any order of the Director resulting from the notice of
charges shall constitute the order referred to in 12 U.S.C.
5514(a)(1)(C).
(c) If the Bureau proceeds pursuant to paragraph (a) of this
section, the provisions of Sec. Sec. 1091.101 through 1091.110, and
Sec. Sec. 1091.113 through 1091.115 will be inapplicable to such
proceeding.
Sec. 1091.112 No limitation on relief sought in civil action or
administrative adjudication.
Nothing in this part shall be construed to limit the relief the
Bureau may seek in any civil action or administrative adjudication,
including but not limited to, seeking an order to have a person deemed
subject to the
[[Page 46045]]
Bureau's supervisory authority under 12 U.S.C. 5514, including for the
reasons set forth in 12 U.S.C. 5514(a)(1)(C).
Subpart C--Post-Determination Procedures
Sec. 1091.113 Petition for termination of order.
(a) Any person subject to an order issued pursuant to Sec.
1091.109(a)(1) may, no sooner than two years after issuance of such an
order and no more frequently than annually thereafter, petition the
Director for termination of the order.
(b) A petition for termination submitted pursuant to paragraph (a)
of this section shall set forth the reasons supporting termination of
the order, including any actions taken by a respondent since issuance
of the order to address the conduct that led to issuance of the order,
and may include any supporting information or evidence that the
petitioner believes is relevant to the Director's determination of the
matter.
(c) A petition for termination shall be filed by the petitioner
with the Executive Secretary at the mailing or electronic address
provided by the Bureau.
(d) The Director shall, promptly upon receipt of a petition for
termination, send a copy of the same to the initiating official.
(1) The initiating official may, within 30 days of his or her
receipt of a copy of a petition for termination, file with the Director
a response to the petition stating whether the initiating official
recommends that the order be terminated, or modified, or that the
petition for termination be denied and the basis for such
recommendation.
(2) The initiating official shall serve a copy of the response to a
petition for termination on the petitioner pursuant to Sec. 1091.107
at the time of filing it with the Director.
(e) Not later than 90 days after submission of a petition under
paragraph (a) of this section, the Director shall issue a written
decision either terminating or modifying the order, or denying the
petition. If the Director modifies the order or denies the petition,
the Director shall explain the basis for his or her decision with
respect to the petition and send the written decision to the petitioner
and the initiating official.
(1) The Director shall serve the written decision on a petition for
termination of order on a respondent pursuant to Sec. 1091.107.
(2) The Director shall send a copy of the written decision on a
petition for termination of order to the recommending official and
initiating official promptly upon issuing the written decision.
(3) The decision of the Director made pursuant to this paragraph
(e) shall constitute final agency action under 5 U.S.C. 704.
Subpart D--Time Limits and Deadlines
Sec. 1091.114 Construction of time limits.
(a) General rule. In computing any period of time prescribed by
this part, or by order of the recommending official or Director, the
date of the act or event that commences the designated period of time
is not included. The last day so computed is included unless it is a
Saturday, Sunday, or Federal holiday as set forth in 5 U.S.C. 6103(a).
When the last day is a Saturday, Sunday, or Federal holiday, the period
runs until the end of the next day that is not a Saturday, Sunday, or
Federal holiday. Intermediate Saturdays, Sundays, and Federal holidays
are included in the computation of time, except when the time period
within which an act is to be performed is ten days or less, not
including any additional time allowed for in paragraph (c) of this
section.
(b) Filing or service of papers. Filing and service are deemed to
be effective:
(1) In the case of personal service or same day commercial courier
delivery, upon actual receipt by the person served;
(2) In the case of overnight commercial delivery service, U.S.
Postal Service Express Mail delivery, or First Class, Registered, or
Certified Mail, upon deposit in or delivery to an appropriate point of
collection; or
(3) In the case of electronic transmission, including email, upon
transmission.
(c) Calculation of time for service and filing of responsive
papers. Whenever a time limit is measured by a prescribed period from
the service of any notice or paper, the applicable time limits are
calculated as follows:
(1) If service is made by U.S. Postal Service First Class,
Registered, or Certified Mail, add three calendar days to the
prescribed period;
(2) If service is made by Express Mail or overnight delivery
service, add one calendar day to the prescribed period; or
(3) If service is made by electronic transmission, add one calendar
day to the prescribed period.
Sec. 1091.115 Change of time limits and confidentiality of
proceedings.
(a) Except as otherwise provided by law, the recommending official
until the issuance of a recommended determination, or the Director at
any time thereafter, at their respective discretion, may extend the
time limits prescribed by this part or by any notice or order issued
pursuant to this part. Any request for an extension of a time limit by
a respondent must be for good cause shown, in writing, and filed with
the recommending official or Director, as appropriate. The mere filing
of a written request for an extension does not alleviate a respondent
of the obligation to meet an applicable time limit absent written
confirmation that an extension has been granted.
(b) Deadlines for action by the initiating official, recommending
official, or the Director established in this part confer no
substantive rights on respondents.
(c) In connection with a proceeding under this part, including a
petition for termination under Sec. 1091.113, all documents, records
or other items submitted by a respondent to the Bureau, all documents
prepared by, or on behalf of, or for the use of the Bureau, and any
communications between the Bureau and a person, shall be deemed
confidential supervisory information under 12 CFR 1070.2(i).
Russell Vought,
Acting Director, Consumer Financial Protection Bureau.
[FR Doc. 2025-18622 Filed 9-24-25; 8:45 am]
BILLING CODE 4810-AM-P