The Consumer Bankers Association (CBA) and the Center for Responsible Lending (CRL) are urging the Consumer Financial Protection Bureau (CFPB) to develop a rule that makes non-depository, non-bank lenders subject to the same level of CFPB supervision that large banks and credit unions are.
Currently, fintechs and other non-bank lenders are not subject to regular oversight by the CFPB. CBA and CRL officials say this has created an unlevel playing field and a risk to consumers.
“CBA long has called on policymakers to institute a level regulatory playing field in the rapidly evolving banking landscape, including in the consumer lending market where fintechs now issue nearly half of all personal loans, up from just 22 percent in 2015. While fintechs continue to grow and increasingly offer traditional financial products, they’re not held to the same federal oversight banks have abided by for more than a decade. By utilizing one of its most effective tools in facilitating competitive markets for consumer financial products and services – the larger participant rule – the Bureau can help to ensure every American receives the protections they deserve, regardless of where they go to meet their financial needs,” Lindsey Johnson, president & CEO of the CBA, said.
The petition jointly filed by the groups calls for a CFPB rule defining the market to cover both closed-end installment loans and open-end lines of credit. It also recommends a rule to cover both the originating and servicing of personal loans.
“There are large non-bank lenders, even some publicly listed companies, regularly hawking suspect credit products without meaningful government oversight on behalf of the consumer. There are red flags aplenty, including loans issued to consumers without checking their ability-to-repay, sky-high default rates, and interest rates that stretch to 100% APR and well beyond. It is time for CFPB oversight,” Mike Calhoun, president of the CRL, said.