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Friday, April 29, 2016

WSJ Report: CFPB Expected to Supervise Online Nonbank Lenders

The CFPB will propose a rule allowing it to supervise online marketplace lenders, the Wall Street Journal reports.

The Journal reported
The agency aims to unveil a proposal this fall to supervise the largest so-called installment lenders that essentially offer small-dollar loans with set payment periods as well as lenders who tie such loans to car titles. The CFPB is now considering broadening its definition of ‘installment’ lending to wrap in marketplace lenders, which operate online and offer similar types of small-dollar loans with set payments.

The move would follow CFPB action in March to begin accepting consumer complaints about online marketplace lenders, often considered a signal of future rulemaking. The bureau’s expected action would help to fill a gap in the oversight of nonbank online lenders, which – although subject to consumer protection laws – do not receive regular regulatory exams.

ABA President and CEO Rob Nichols pointed out in an op-ed earlier this year
For customers, a loan is a loan and a payment is a payment. The features may be the same regardless of whether the company has a charter or not, but the confusion about who regulates whom – and in what ways – is leading to gaps in consumer protection.
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