The Consumer Financial Protection Bureau (“CFPB”) will begin supervising “larger participants” in the student loan servicing market effective March 1.
In December 2013, the CFPB issued its final rule regarding supervision of “larger participants,” which are defined to include an account volume of greater than $1 million. Account volume is tied to the number of students and former students for whom the servicer is performing servicing activities.
Nonbank student loan servicers that are “larger participants” will now be subject to examination by the CFPB for compliance with federal laws, including the alphabet soup of statutes and regulations (FCRA, EFTA, FDCPA), as well as the entity’s practices pursuant to the “unfair, deceptive, or abusive” standards, which have been a focal point for the CFPB.
Financial institutions that need to consider this rule should be well underway with adapting to the many requirements of the rule. However, if you have questions, please contact Spilman or other knowledgeable counsel.