CFPB May Plan to Supervise Marketplace Lenders

According to a recent Wall Street Journal article, the Consumer Financial Protection Bureau (“CFPB”) is planning to bring the largest online lenders under its supervision as soon as late 2017.

The CFPB is expected to release a proposal this fall to supervise the largest online lenders that offer small-dollar loans with set payment periods and lenders who tie such loans to car titles. According to the article, the agency is also now considering broadening its definition of “installment” lending to include marketplace lenders.

Former CFPB Deputy Enforcement Director, Lucy Morris, said the agency is using the rules on the biggest market participants “to really expand its supervisory authority, including over emerging lenders, and the statute allows for that.” Richard Horn, a former CFPB Senior Counsel and Special Adviser, also said that the agency’s decision to start taking consumer marketplace lending complaints last month is “a very strong signal that they’re planning to take action in the marketplace lending industry.”

The Wall Street Journal reported that the timing of the proposal is widely expected to slip a few months or into next year, meaning a rule likely wouldn’t be completed until late 2017 at the earliest.

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