CFPB’s New Enforcement Order Registry: What BHPH and Independent Dealers Need to Know

• By: Stephen Pallas
• On: 07/02/2024 09:43:54
• In: Federal / National Posts
• Comments: 0

What is the Enforcement Order Registry?

The CFPB's enforcement order registry is designed to increase transparency and accountability among nonbank financial service providers. Nonbank entities, such as non-depository consumer lenders, investment advisors, real estate-related consumer financial services, loan servicers, consumer vehicle finance providers, payment providers, consumer reporting companies, and consumer debt collection agencies, are required to register any applicable enforcement orders with the CFPB. This applies to any entity not falling into specific exempt categories, such as insured depositories, credit unions, and certain motor vehicle dealers.

Key Points of the Registry:

• Covered Orders: The registry requires the reporting of final, public enforcement orders, including consent orders, issued since January 1, 2017. These orders must involve alleged violations of federal consumer financial laws, other laws enforced by the CFPB, or certain federal and state unfair, deceptive, or abusive acts or practices (UDAAP) laws.

• Registration Requirements: Covered nonbanks with relevant orders must submit identifying corporate information, details of affiliates subject to the order, a copy of the order, and other related information to the CFPB. The initial registration period begins on October 16, 2024, for larger CFPB-supervised nonbanks, with subsequent registration deadlines extending into 2025 for other covered nonbanks.

• Annual Written Statement: Larger nonbanks subject to CFPB supervision, with at least $5 million in annual receipts, must also submit an annual written statement from a senior executive. This statement will attest to the company's oversight and compliance with the enforcement order.

Implications for BHPH and Independent Dealers

The enforcement order registry has significant implications for BHPH and independent dealerships, many of which may fall under the “covered nonbank” category due to their involvement in non-depository consumer lending and consumer vehicle finance.

Compliance Requirements

• Identify Covered Orders: Dealerships must review their records to identify any enforcement orders issued since January 1, 2017, that could be subject to this new rule. These orders may include consent decrees or settlement agreements with regulatory agencies related to alleged violations of consumer financial protection laws.

• Prepare for Registration: If a dealership has an applicable enforcement order, it must prepare to register this order with the CFPB within the specified submission period. This process includes gathering all required documentation and ensuring that the order's details, such as the issuing agency and effective dates, are accurately recorded.

• Designate an Attesting Executive: Larger dealerships that qualify under the rule must also designate a senior executive to oversee compliance with the enforcement order and to submit an annual attestation to the CFPB.

Potential Risks

• Increased Scrutiny: By registering with the CFPB, dealerships may face increased regulatory scrutiny and a heightened risk of litigation related to their compliance practices. It's essential for dealerships to have robust compliance systems in place to mitigate these risks and to be prepared to address any issues that may arise from the enforcement order.

• Litigation Exposure: The process of registering and submitting annual statements increases the dealership's exposure to potential litigation. Any discrepancies or failures in compliance can lead to legal challenges, making it critical to allocate sufficient time and resources to ensure thorough compliance with the new rule.

Timeline and Next Steps

Key Dates for Registration

• October 16, 2024 - January 14, 2025: Initial registration period for larger participant CFPB-supervised nonbanks.

• January 14, 2025 - April 14, 2025: Registration period for other CFPB-supervised covered nonbanks.

• April 14, 2025 - July 14, 2025: Final registration period for all other covered nonbanks.

Annual Statement Deadlines

• March 31, 2025: Written statements due for larger participant CFPB-supervised nonbanks.

• March 31, 2026: Written statements due for other CFPB-supervised covered nonbanks.

Steps for Compliance

1. Review Enforcement Orders: Identify any relevant enforcement orders issued since January 1, 2017, that may need to be registered.

2. Prepare Documentation: Gather the necessary information and documents required for the CFPB registration process.

3. Designate Compliance Personnel: Identify and prepare a senior executive to oversee compliance and to submit the required annual written statement.

4. Consult Legal Counsel: Work with legal counsel to navigate the complexities of the new rule and to ensure full compliance with registration and reporting requirements.

TIADA's Support and Resources

TIADA is committed to helping its members navigate the new CFPB enforcement order registry requirements. TIADA offers resources and support to ensure that dealerships understand their obligations and can comply effectively with the new rule.

TIADA encourages all BHPH and independent dealers to stay informed about these regulatory changes and to seek guidance as needed to comply with the new CFPB enforcement order registry. By taking proactive steps now, dealerships can minimize risks and ensure they remain in good standing with regulatory authorities.

Stay tuned for more updates from TIADA on regulatory changes and how they may impact your dealership.