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FFELP student loan borrowers: take full advantage of fixes to Income-Driven Repayment

May 25, 2022 / Source: CFPB

Recently, the CFPB announced that it will begin to use a provision of law to supervise a wider range of nonbank financial companies. While we expect to use this provision judiciously, it is an important tool that Congress gave us to assess emerging risks facing consumers. Here are some things you should know:

What is a supervisory examination?

Supervision is one of the CFPB’s primary functions and it is different from enforcement proceedings. It is common for financial companies to be subject to oversight, such as supervisory and licensing exams by state regulators. A CFPB exam is similar to a state exam. In general, in advance of the exam you’ll be told what the CFPB will be focused on. Companies are often asked to show records or provide data for examiners to assess compliance with Federal consumer financial laws.

The process is confidential, and the end result is a supervisory letter or an examination report that identifies areas where a company’s practices may not have been in line with the law. Typically, company management reviews the findings and implements any necessary changes.

My business is not subject to CFPB’s enforcement authority. Could my business be subject to CFPB nonbank supervision?

No. CFPB’s enforcement authority covers a broad range of entities subject to the laws enforced by the agency. If you are a financial company in the business of consumer financial products or services, you are probably subject to multiple laws that the CFPB enforces. If you aren’t subject to CFPB’s enforcement authority, then you can’t be subject to a CFPB examination either.

What businesses are covered by the CFPB’s nonbank supervision program?

The scope of the CFPB’s supervision authority is spelled out by Congress in the Dodd-Frank Act. Generally speaking, if you’re in the mortgage, private student loan, or payday loan industry, you’re automatically subject to the CFPB’s supervision authority.

You can also be subject to CFPB’s supervision authority if you’re a “larger participant” in a nonbank consumer financial market. To date, the CFPB has defined thresholds for this category of supervision for consumer reporting, consumer debt collection, student and auto loans, and international money transfers.

Congress also authorized the CFPB to supervise nonbank financial companies where we have reasonable cause to believe that the company is posing risk to consumers. There are many indicators of risk, but the law specifies consumer complaints as one indicator of risk.

If the CFPB is seeking to supervise your business because it may pose a risk to consumers, you will receive a notice. You will then have an opportunity to respond to the notice before a final determination is made about whether the CFPB will bring you under its supervisory authority.

Do you conduct examinations of every covered entity?

No. CFPB examinations cover a portion of the nonbanks subject to the CFPB’s nonbank supervision authority. The CFPB uses a risk-based prioritization process to determine which entities are examined.

Can I see the complaints that the CFPB receives about my business?

Yes. Businesses can sign up to enroll in our complaint portal. You’ll be able to see the complaints that CFPB receives and you can use our system to respond. Consumers can also use the portal to track the status of a complaint and to view a company’s complaint response. The CFPB also compiles complaints from the public consumer complaint database.

How can I learn more about what is covered in an examination?

The CFPB has manuals that our examiners use when conducting exams. The CFPB’s examination manual are publicly available. To learn more, visit our supervision and examinations page.