The CFPB is proposing to rescind its rule that requires certain nonbank entities to register covered agency enforcement and court orders.

Specifically, the rule applies to any supervised or non-supervised nonbank that engages in offering or providing consumer financial products or services and any of its service provider affiliates unless excluded.

The rule requires that covered entities register with the CFPB if they are, or become, subject to certain types of orders from local, state, or federal agencies or courts involving consumer protection law violations.

When it was issued during the Biden Administration, the CFPB said the rule would help deter violations of consumer protection laws. The CFPB also said it would help the bureau, law enforcement and the public limit harms from repeat offenders.

“Having access to a centralized list of all relevant orders entered against nonbanks would significantly increase the Bureau’s ability to monitor the market so that the Bureau can identify, better understand, and ultimately, prevent further consumer harm, particularly from repeat offenders,” the bureau said, at the time.

The CFPB adopted the rule despite opposition from, and concerns raised by, the Small Business Administration’s Office of Advocacy and various state regulator associations, including the Conference of State Bank Supervisors (CSBS) and American Association of Residential Mortgage Regulators.

Significantly, the three sentence provision in Dodd-Frank authorizing the CFPB to adopt registration requirements provides that in “developing and implementing registration requirements under this paragraph, the Bureau shall consult with State agencies regarding requirements or systems (including coordinated or combined systems for registration), where appropriate.”

The bare bones nature of the Dodd-Frank registration provision, and opposition to the adoption of the registry rule by state regulators, raise significant questions regarding whether a court would find the rule to be consistent with Dodd-Frank.

The Trump Administration’s CFPB said the rule is not necessary.

“The Bureau is proposing to rescind the NBR Rule based upon concern that the costs the rule imposes on regulated entities, and which may in large part be passed onto consumers, are not justified by the speculative and unquantified benefits to consumers discussed in the analysis proffered in the NBR Rule,” the CFPB said, in proposing the rescission.

The Bureau added that “the NBR Rule is not necessary as a tool to effectively monitor and reduce potential risks to consumers from bad actors as Congress has authorized multiple other Federal and State agencies to enforce Federal consumer financial laws.”

The CSBS has called for rescinding the rule. In a letter to Acting CFPB Director Russell Vought, CSBS President and CEO Brandon Milhorn wrote that state regulators in 2010 established a fully searchable website that allows consumers to view company information and regulatory orders for state-licensed nonbanks.

“The Nonbank Registry is therefore unnecessary, duplicative of existing resources available to consumers, and a waste of federal funds,” he wrote.

In addition, he wrote that the CFPB did not consider the costs of the regulations on small entities. As a result, Milhorn wrote, the CFPB’s estimates of the cost of the rule were “unrealistically low.”

He also said that the nonbank registry is an infringement on the basic tenets of federalism. “Monitoring for, and reporting on, compliance with orders based on state law is exclusively the authority and responsibility of states, not the federal government,” he wrote. “Congress did not give the CFPB any authority over state and local consumer financial laws.”

Comments on the proposed rescission of the rule are due on or before June 13, 2025.