The Consumer Financial Protection Bureau (CFPB) has taken action to establish supervisory authority over installment lender World Acceptance Corp., saying it aims to ensure compliance with federal consumer financial protection laws.
“The CFPB has determined that World Acceptance Corporation has met the legal requirements for supervision,” the agency said in a Friday (Feb. 23) press release.
It added: “Importantly, the CFPB’s order does not constitute a finding that the entity has engaged in wrongdoing.”
World Acceptance did not immediately respond to PYMNTS’ call for comment.
The company said in its annual report released June 1 that the CFPB had begun using its “dormant authority” to examine nonbank entities when it has reasonable cause to determine that the institution’s conduct poses risks to consumers.
“Specifically, the CFPB has notified the company that it is seeking to establish such supervisory authority over the company,” World Acceptance said in its annual report. “The company disagrees that the CFPB has reasonable cause to supervise the company, has responded to the CFPB’s notice, and is awaiting further response from the CFPB.
The CFPB’s order regarding World Acceptance is the regulator’s first supervisory designation order in a contested matter, the CFPB said in its press release.
The regulator, responsible for supervising a variety of financial firms, recently identified the need to utilize specific legal authority to oversee entities posing risks to consumers, according to the release.
Under the CFPB’s new procedures, entities not currently subject to supervision may receive a notice and choose to either consent to supervision or contest the notice, the release said.
“Typically, the notices have pointed to consumer complaints and other indicators of risk to consumers,” the CFPB said in the release.
Most entities have opted to consent, per the release. The supervisory exams are confidential and are designed to help companies identify and address any potential violations of the law.
In January, three members of Congress urged the CFPB to reopen and extend the public comment period on a proposed rule that would allow it to supervise large nonbank companies that offer services like digital wallets and payment apps.
They also urged the CFPB to reconsider finalizing the rule as it is currently proposed.
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