CFPB’s Post-Google Plan for Nonbanks Leaves Gaps, Advocates Warn

The Consumer Financial Protection Bureau’s proposal to replace a standard the Biden administration used to scrutinize an Alphabet Inc. unit risks missing consumer harms before they explode, advocates for traditional banks and consumers said.

The consumer finance regulator’s proposal, released last month, would allow it to designate a nonbank for supervision only after determining that the company’s conduct “presents a high likelihood of significant harm to consumers” and is “directly connected” to the offering of a consumer financial product.

Banks said the proposal could create gaps in consumer protection oversight.

“Without the possibility of supervision, nonbanks may operate without ...