Regulatory Comment: Defining Larger Participants in Certain Consumer Financial Products and Services Markets

The Pew Financial Security Portfolio, a part of the Pew Health Group, includes two projects engaged in research related to the consumer financial products and services markets discussed in the Consumer Financial Protection Bureau (CFPB) proposed rule on defining larger participants in certain markets. The Safe Small Dollar Loans Research Project develops research-based policy solutions to address predatory lending practices that stifle consumer access to transparent and safer forms of borrowing. The Safe Checking in the Electronic Age Project is reviewing prepaid cards and other alternatives to traditional checking accounts with a focus on what new consumer safeguards may be appropriate.

The larger participant rule will delineate both the consumer financial markets in which the CFPB has supervisory authority and also which participants—covered persons under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010—are subject to this supervision.  This presents an important opportunity for the CFPB to bring clarity to and level the supervisory playing field in markets for nondepository consumer products. Supervision will allow the CFPB to conduct examinations and gather information to monitor these markets and ensure compliance with federal consumer financial laws.

Based on work at the Pew Health Group on small dollar loans and checking accounts, the projects urge the CFPB to issue an initial rule broadly covering nondepository markets. Within these markets, coverage of individual participants under the larger participant rule should permit comprehensive supervision by the CFPB. The CFPB's supervisory authority must be broader than its rulemaking authority because examination of the market informs rulemaking needs.