The Consumer Financial Protection Bureau proposed a regulation that would let it examine the books of debt collectors and consumer reporting businesses as part of its program to supervise non-bank financial companies.
“Our proposed rule would mean that those debt collectors and credit reporting agencies that qualify as larger participants are subject to the same supervision process that we apply to the banks,” the bureau’s director, Richard Cordray, said in an e-mailed statement.
The regulation, which must be finalized by July 21, would bring credit bureaus such as Experian Plc, Equifax Inc. and TransUnion Corp. under federal supervision for the first time. The proposal would cover, also for the first time at the federal level, debt collectors such as Asset Acceptance Capital Corp., Portfolio Recovery Associates Inc. and Encore Capital Group Inc.
Supervision, the process of examining records and collecting data from companies, can lead to enforcement action if regulators find violations of the law. In the case of these companies, the consumer bureau could find breaches of the Fair Debt Collection Practices Act or the Fair Credit Reporting Act.
Under the proposal, debt collectors with more than $10 million in annual receipts from collection activities will face supervision by the consumer bureau. According to the agency, this threshold would cover about 175 debt collection companies - - 4 percent of all such companies -- that together account for 63 percent of the industry’s annual revenue.
30 Companies Covered
Consumer reporting companies with more than $7 million in annual revenues would be supervised, according to the proposal. That would cover about 30 companies that together account for about 94 percent of the industry’s annual revenues.
The bureau requested public comment on the proposal for 60 days after publication in the Federal Register.
The Dodd-Frank law of 2010 requires the bureau to issue a rule by July 21, 2012 on what “larger participants” in the non-bank consumer financial services market it will supervise. The bureau began examination of banks with assets above $10 billion on consumer issues on July 21, 2011.
Dodd-Frank directs bureau to supervise mortgage originators, payday lenders and student loan companies. That program began on Jan. 5, shortly after President Barack Obama installed Cordray as the bureau’s first director.
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