The CFPB’s recently released Fall rulemaking agenda shows that the agency plans to issue in March its final rule on a registry for nonbanks.
Proposed Rule on National Registry …
As reported in SAA 2023-04 (Jan. 26), the Bureau last January announced via press release that it had filed a rule proposal: “to establish a public registry of supervised nonbanks’ terms and conditions in ‘take it or leave it’ form contracts that claim to waive or limit consumer rights and protections, like bankruptcy rights, liability amounts, or complaint rights…. Under the proposed rule, nonbanks subject to the CFPB’s supervisory jurisdiction would need to submit information on terms and conditions in form contracts they use that seek to waive or limit individuals’ rights and other legal protections. That information would be posted in a registry that will be open to the public, including to other consumer financial protection enforcers.”
… And It Covers Mandatory Arbitration Agreements and Class Action Waivers
Any ambiguity about whether the proposed rule covered mandatory predispute arbitration agreements and class action waivers was resolved in the affirmative. Says the release: “Under the proposal, the CFPB would seek information on contract terms and conditions seeking to waive any constitutional, statutory, or common law legal protection, right, or defense; restrict the ability of consumers to complain; limit the time or place for consumers to bring legal actions; limit liability amounts; waive class action rights; and impose arbitration provisions. Both company information and information about the use of the terms and conditions would be published” (emphasis added). As reported in SAA 2023-13 (May 30), the House Financial Services Committee Subcommittee on Financial Institutions and Monetary Policy held a March 9 hearing, Consumer Financial Protection Bureau: Ripe for Reform. One of the topics discussed was the CFPB’s proposed new rule seeking information from nonbanks on, among other things, arbitration and class action waivers.
Final Rule Expected in March
The CFPB’s 2023 Fall Rulemaking Agenda lists at the “Final Rule Stage” the Registry of Supervised Nonbank That Use Form Contracts to Impose Terms And Conditions That Seek To Waive Or Limit Consumer Legal Protections, No. 3170-AB14. The description reads: “The CFPB filed a proposed a rule that would require certain supervised nonbank entities to register with the CFPB and provide information about their use of certain terms and conditions in standard-form contracts for consumer financial products or services that seek to waive or limit consumer rights or legal protections. In particular, the proposed rule would collect information on these standard terms and conditions used in form contracts that are not subject to negotiation. Under the proposal, the CFPB would establish a publicly accessible registry that identifies registrants and, subject to applicable law, publish information that registrants submit to the registry about their use of covered terms and conditions.” The Agenda states that the final rule is expected in March.
(ed: We’ll track this one.)
