Pursuant to authority under the Consumer Financial Protection Act (“CFPA”), the Consumer Financial Protection Bureau (“CFPB”) published a supervisory designation order establishing supervisory examination over World Acceptance Corporation (“World Acceptance”), a small dollar installment lender. This order comes in the wake of World Acceptance contesting the CFPB’s Notice of Reasonable Cause to supervise in April 2023 and marks the first time the CFPB has established supervisory authority over a nonbank lender following a determination that the risks surrounding the conduct of the consumer finance company are sufficient to justify CFPB supervision.
The CFPA authorizes the CFPB to supervise “covered persons” whose conduct poses risks to consumers with regard to the offering or provision of consumer financial products or services. The CFPA does not specify the character or magnitude of “risks to consumers” that is required to subject a covered person to supervision. Instead, Congress left such determination to the discretion of the CFPB, with the requirement that the CFPB (i) identify concrete risks to consumers, which it has reasonable cause to determine exist, (ii) notify the entity of those risks and (iii) give the entity a reasonable chance to respond.
Read more