Two unlikely allies, a consumer group and a banking trade association, are urging the Consumer Financial Protection Bureau to start regulating the largest fintech lenders that make installment and other personal loans.

Director of the Consumer Financial Protection Bureau Rohit Chopra


The Center for Responsible Lending and the Consumer Bankers Association asked CFPB Director Rohit Chopra in a letter Thursday to develop a rule that would expand the agency’s jurisdiction to include such lenders, which the groups say should be subject to the same rules as the big banks and credit centers. unions

“Although our views on consumer financial regulation issues often diverge, CRL and CBA share a common belief that the absence of a rule defining the largest participants in the personal loan market has created a field of unequal game and great risk to consumers that the Bureau can and should resolve through further regulation of participants,” the letter said.

The CFPB previously considered expanding its scope in 2017, when the agency said in its docket that it “is now working to develop a proposed rule that would define non-bank ‘largest players’ in the personal loan market, including consumer installment loans and vehicle title loans. However, in 2018, the agency under the Trump administration classified the regulation as “dormant.”

The groups called on the CFPB to reconsider rulemaking as the number of fintech companies targeting high-risk customers grows. Banks have long complained that non-bank fintech companies don’t have the same kind of strict oversight that they do.

“The current regulatory regime creates an uneven playing field and a significant risk that consumer protection issues affecting vulnerable consumers will go undetected,” according to the letter. “Banks with assets greater than $10 billion are, of course, subject to CFPB supervision, while non-depositories offering the same products, or risky products, are not subject to supervision. That means the Bureau It doesn’t have the same window into the practices of these nondepositories as it has with respect to depositories.”

The groups also mention the buy now/pay later market, which they say is confusing because it is sometimes unclear whether BNPL companies are offering closed loans. Chopra promised to apply consumer protection laws to BNPL companies at a press conference earlier this week.

“We recommend that the Bureau cover both closed installment loans and open lines of credit,” the groups said. “In truth, the line between these two products is often blurred: Lenders offering what are, in the form, closed-end loans generally encourage consumers, as they pay off their loan, to reborrow at least until the original loan amount, such as an open-ended line of credit, while open-ended loans can be structured so that each withdrawal is repayable in fixed payments over a fixed term, so it’s a lot like an equity loan. timeless”.


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