Monday, August 6, 2012
Consumer Financial Protection Bureau to Supervise Credit Bureaus
The Consumer Financial Protection Bureau recently adopted a rule to begin supervising larger consumer reporting agencies, which include what are commonly known as credit bureaus and credit reporting companies. The rule will become effective September 30, 2012.
CFPB Director Richard Cordray said:
“Credit Reporting is at the heart of our lending systems and enables many of us to get credit,
afford a home, or get an education. Supervising this market will help ensure that it works
properly for consumers, lenders, and the wider economy. There is much at stake in making
sure it is both fair and effective.”
According to a press release by CFPB, "credit reporting agencies are private businesses that track a consumer's credit history and other consumer transactions." These companies play a major in the consumer financial services marketplace and in the lives of consumers. Consumer reports are used for many things such as determining eligibility for credit and the interest rates that consumers pay for credit.
The Dodd- Frank Wall Street Reform and Consumer Protection Act gives the CFPB authority to supervise nonbanks in the specific markets of residential mortgage, payday, and private education lending. Previously, consumer reporting at the federal level was only subject to law enforcement authority. No single federal government agency could see the whole picture and adequately monitor what was happening with consumer reporting agencies. This new rules allows the CFPB to supervise the larger consumer reporting agencies as well as write rules and enforce the law as needed.
To supervise credit reporting, the CFPB will use the same approach it uses in supervising banks. The credit bureaus will be subject to review of compliance systems and procedures, on-site examinations, and discussions with relevant personnel.
To view the full rule, click here.