CFPB to Level Playing Field Between Banks and Non-Banks

The Consumer Financial Protection Bureau (CFPB) has set its regulatory radar on leveling the playing field between banks and non-bank institutions across a variety of financial services, including debt collection, student loans and auto lending. 

Non-banks, particularly large mortgage servicers like Ocwen (NYSE: OCN) and Walter Investment Management Corp. (NYSE: WAC), have recently caught the attention of federal regulators concerned about the rapid, expansive growth of these entities.

Now, the CFPB casts their hat into the ring, having increased their attention as of late in monitoring consumer complaints coming from non-bank providers operating in the various areas of debt collection, student loans and auto lending. 

“We are now increasingly able to level the playing field between banks and their nonbank competitors for the first time,” said CFPB Deputy Director Steven Antonakes in a recent speech at the Consumer Bankers Association. “These changes are most notable for the nonbank institutions, but for many banks as well.”

The CFPB estimates that coming out of the financial crisis, approximately 30 million Americans have one or more debts in collection for amounts averaging $1,500 per person. 

The issue of student loan servicing is also an utmost concern for the CFPB, according to Antonakes, who said his agency is taking steps to combat problems young people have relating to “poor customer service” from some servicers managing their federal and private loans.

“This needs to change,” he said. “So we took steps necessary to expand our supervisory jurisdiction beyond the larger banks to the larger nonbank firms that engage in student loan servicing. We will exercise this new authority to examine whether student loan servicers are complying with the law and treating their customers fairly.”

Regarding auto lending, Antonakes suggests certain practices such as discretionary pricing in auto finance on the basis of race, ethnicity and national origin “create serious risks.”

In December, the CFPB slammed Ally with a $98 million enforcement action, alleging the indirect auto lender practiced discriminatory pricing against more than 235,000 minority borrowers.  

“In addition, we will be moving forward with a proposal to expand our supervisory authority in this area beyond the larger banks to encompass the larger nonbank auto lenders, also providing more complete oversight over the lender side of the marketplace,” Antonakes said.

Read the Antonakes speech

Written by Jason Oliva

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