The Consumer Financial Protection Bureau (CFPB) announced a final rule that rescinds Biden-era amendments made to its procedures for supervisory designations of nonbanks. The amended rule reestablishes that decisions and orders in contested supervisory designation proceedings held pursuant to section 1024(b)(7) of the Consumer Financial Protection Act (CFPA) are confidential. This change effectively reinstates the confidentiality standard for supervisory designation proceedings first established in a 2013 rulemaking, and aligns with the broader rollback of the agency’s supervision of nonbanks under the Trump administration.
Background and rule change
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 authorizes the CFPB to supervise a nonbank that the CFPB reasonably believes is “engaging, or has engaged, in conduct that poses risks to consumers with regard to the offering or provision of consumer financial products or services.”[1] In a 2013 rulemaking, the CFPB established procedures to govern the supervisory designation proceedings (2013 rule). The 2013 rule provided that any information regarding supervisory designation proceedings was deemed “confidential supervisory information not publicly disclosed.”
The CFPB subsequently amended the 2013 rule three times between 2022 and 2024. Among other changes, the amended rule enabled the CFPB director to publicly release final decisions and orders from contested supervisory designation proceedings. This meant that if an entity contested its supervisory designation, the entity risked having a decision or order against it publicly released, while an entity that consented to its supervisory designation would have no decision or order eligible for public release.
In May 2025, the CFPB issued a notice of proposed rulemaking that sought comment on rescinding amendments to the 2013 rule. Among other commenters, several trade associations asserted that public disclosure of supervisory designations resulted in undue reputational harm, created competitive disadvantages and discouraged candid communication with the CFPB because of the risk of such communications becoming public. Other commenters supported the disclosure of supervisory designations to facilitate transparency of the CFPB’s decisions and provide consumers with information on entities that could impact their financial health.
Final rule
The CFPB is now rescinding the amendments to the 2013 rule (except for limited “process adjustments”), and, in doing so, reestablishes that final orders and decisions in contested supervisory proceedingsconstitute confidential supervisory information. As a result of this change, even if a company contests the CFPB’s decision to supervise it, the outcome and reasoning will remain confidential and not be published.
To support the rulemaking, the CFPB alleges that the risk of reputational harm from public disclosure of a supervisory decision or order creates a disproportionate incentive for companies to consent to supervision, even in cases where they might otherwise have a strong case to contest the designation. The CFPB also asserts that the concern about reputational impact is not outweighed by the interests in disclosure of information, as information in a supervisory designation proceeding is limited and its purpose is “not to guide the substantive conduct of other market participants or consumers.”
The final rule takes effect on October 27.
Looking ahead
The CFPB’s recent rulemaking activity is the latest in its broader initiative to curtail the agency’s supervisory powers – particularly over nonbanks – an effort the CFPB previewed in an April memo highlighting its supervision and enforcement priorities.
In other moves, the CFPB withdrew two supervisory orders, one against a nonbank financial services provider and the other against an installment lender, foreshadowing the CFPB’s diminished reliance on its “dormant authority” over nonbanks. Also, last month, the CFPB announced a proposed rule that would likely decrease the number of nonbanks it supervises under Section 1024(a)(1)(C) of the CFPA. The proposed rule would raise the threshold of consumer risk required to designate a nonbank company for supervision to those activities that present a high likelihood of significant harm to consumers. Public comments on this proposal were due by September 25, 2025.
While we expect they’ll continue to face less scrutiny from the CFPB, nonbanks should note the sharpened focus of state regulators and attorneys general on consumer protection to fill the void left by the CFPB’s reduced supervisory and enforcement efforts.
[1] 12 USC 5514(a)(1)(C).