CFPB Seeks Comment on Proposals to Rescind Multiple Biden-Era Rules

The CFPB has proposed rescinding the Nonbank Registry Rule (NBR Rule), along with the amendments to its 1) Rules of Practice for Adjudication Proceedings (Rules of Practice) and 2) Procedures for Supervisory Designation Proceedings. After conducting a review of all three rules and procedures, the CFPB classified the changes imposed as "largely unnecessary" based on the associated costs and benefits and seeks comment on each proposal.

The CFPB first published a notice of proposed rulemaking on May 13, 2025, seeking to rescind the amendment to its Rules of Practice adopted on Feb. 22, 2022, and March 29, 2023. The amendments "expanded parties' opportunities to conduct depositions in adjudication proceedings" in addition to modifying "timing and deadlines, the content of answers, the scheduling conference, bifurcation of proceedings, the process for deciding dispositive motions, and requirements for issue exhaustion," among other technical changes.

Though no administrative proceedings were conducted under the Rules of Practice since the 2022 and 2023 amendments, the CFPB cited particular concern for the provisions of the amendments that "transferred authority to decide dispositive motions from the hearing officer who is presiding over the proceeding (normally an administrative law judge) to the Director." The proposed rule, after review of solicited comments, would be substantively identical to the Rules of Practice in place prior to the 2022 and 2023 amendments.

The CFPB subsequently published a second notice of proposed rulemaking on May 14, 2025, proposing to rescind the amendments to the Procedures for Supervisory Designation Proceedings adopted on April 29, 2022, as well as on Nov. 21, 2022, and April 23, 2024. The amendments to be rescinded "provided for public release of final decisions and orders by the Director and made other changes to the CFPB's procedures for designating nonbank covered persons for supervision."

The CFPB expressed its concern that entities exercising the right to contest supervisory designation would be subject to a public decision and order "asserting that the entity 'is engaging, or has engaged, in conduct that poses risks to customers.'" In consideration of businesses' concern over public reputation, the CFPB highlighted that the amendments could improperly persuade entities to consent to designation "even when they have good arguments that designation is unwarranted" and has requested comment on "the impact of public release on supervised entities and the supervisory process."

Finally, the CFPB has proposed to rescind the NBR Rule issued on June 3, 2024, and published in the Federal Register on July 8, 2024. The NBR Rule currently requires particular nonbank covered persons subject to certain final public orders of a government agency to report the existence of those orders and file compliance reports annually.

The CFPB's basis for rescinding the NBR Rule highlights the concern that the cost imposed on regulated entities to comply with the rule is not sufficiently justified by the benefits to consumers. Citing the "significant regulatory burden imposed by the NBR Rule," the CFPB concluded that the NBR Rule is unnecessary "as a tool to effectively monitor and reduce potential risks to consumers from bad actors." In support of its proposal for rescission, the CFPB also noted that "Congress has authorized multiple other Federal and State agencies to enforce Federal consumer financial laws," thus negating the necessity of the NBR Rule.

This development does not come as a surprise, as the CFPB previously announced on April 11, 2025, that it "will not prioritize enforcement or supervision actions with regard to entities that do not satisfy future deadlines under [the NBR Rule] to submit registration information," as Holland & Knight previously reported. At that time, the CFPB also stated that it was further considering issuing a proposed rule to rescind the rule or narrow its scope.

These proposals follow the CFPB's May 9, 2025, announcement to withdraw nearly 70 guidance documents that improperly impose "rights or obligations through guidance," as Holland & Knight previously reported. Collectively, the agency's recent changes and enforcement and litigation shifts, along with these proposals, highlight its goal to scale back the scope of its oversight activities and shed light on the future of the CFPB's operations as the Trump Administration seeks to effectively downsize and streamline the agency.

Visit Holland & Knight's resource center, CFPB Dispatch: Legal Updates and Insights, to stay on top of the latest CFPB developments.