In a recent move that could shift how nonbanks manage compliance and transparency, the Consumer Financial Protection Bureau (CFPB) has proposed rescinding a rule that would have required certain nonbanks to register and publicly disclose specific agency enforcement and court orders.
At first glance, this might seem like a bureaucratic rollback. But for companies operating in or adjacent to the consumer financial space, the implications go deeper—and ignoring them could carry real risk.
What’s Changing?
The original rule, finalized in 2023 but not yet fully implemented, would have created a public registry requiring nonbank entities subject to certain government or court orders related to consumer protection violations to self-report and disclose those actions. The goal was regulatory visibility and consumer transparency.
Now, the CFPB is walking that back. According to the Bureau, the rescission proposal reflects concerns about the administrative burden on businesses and questions about the rule’s alignment with existing legal frameworks.
But this doesn’t mean enforcement is going away—far from it. What’s changing is the visibility of that enforcement and the expectations placed on companies to proactively share it.
Why This Matters for Your Business
If the rule is rescinded, some nonbanks may see it as a loosening of regulatory pressure. But that would be a mistake.
Removing the public registry could reduce proactive transparency, but it also places a heavier burden on companies to know exactly where they stand—especially if they’re already subject to multiple orders from state or federal agencies.
Here’s the real risk: businesses that misinterpret the rollback as a free pass may find themselves out of compliance, not because they ignored a requirement, but because they misunderstood where one ends and another begins.
The rule change may also complicate due diligence efforts for firms acquiring or partnering with nonbanks. Without a centralized registry, you’ll need stronger internal processes and third-party vetting to uncover any enforcement baggage that might come with a potential deal.
What’s at Stake
Missteps in regulatory compliance aren’t just a paperwork issue—they come with serious consequences:
a) Fines and Penalties: Nonbanks that fail to comply with still-standing orders could face steep financial penalties.
b) Reputational Damage: A public enforcement action—especially one that catches leadership off guard—can undermine trust with partners, customers, and investors.
c) Business Disruption: Enforcement orders often come with operational mandates, which can force internal restructuring, tech overhauls, or leadership changes on short notice.
And without a public registry, businesses may not spot these risks until it’s too late.
What You Should Do Now
a) Don’t Assume Less Transparency Means Less Risk: The rollback may shift disclosure expectations, but it doesn’t mean enforcement will ease up.
b) Update Your Compliance Monitoring: If you’re working with nonbanks or are one yourself, review your processes for tracking enforcement actions—especially those outside your home jurisdiction.
c) Revisit Your Risk Framework: If you’ve relied on public registries to vet vendors, partners, or acquisition targets, it’s time to build a more robust internal system.
d) Engage Legal and Regulatory Experts: Ensure your teams fully understand where enforcement boundaries lie—especially as rules change.
Final Thought
The proposed rollback of the nonbank order registry rule might seem like a bureaucratic footnote, but it’s a wake-up call for any business that touches the consumer financial space. Compliance isn’t getting simpler—it’s just getting more fragmented. In this new environment, regulatory literacy is your competitive edge.