The Consumer Financial Protection Bureau is proposing a new standard for supervising nonbanks. .The proposal, issued Aug. 25, would bring more uniformity to CFPB requirements, said Acting Director Russell Vought. The proposal would define consumer risks as conduct that “presents a high likelihood of significant harm to consumers” and is “directly connected to the offering or provision of a consumer financial product or service as defined by the Consumer Financial Protection Act.” According to the bureau, the proposal could reduce compliance costs by offering more clarity for potentially covered companies on what activities could trigger supervision. Under the Consumer Financial Protection Act, the CFPB is authorized to supervise nonbanks on a case-by-case basis if it has reasonable cause to find that the financial products or services nonbanks offer pose “risks to consumers.” According to the CFPB, the current wording of the nonbank supervisory standard is too broad. “In the bureau’s preliminary view, Congress would not have expected it to expend its supervisory resources on issues that are speculative in likelihood or trivial in impact,” according to the proposed standard. “Although some prior orders have adopted a broad approach to the phrase ‘risks to consumers’ under [the CFPA], asserting that it can include even immaterial potential harms, the bureau proposes to reconsider this approach.” Another problem the bureau sees in the current rule’s wording is its lack of clarity in the applicability of past precedent surrounding “risks to consumers” to new cases. “The status quo creates uncertainty for institutions facing potential designation about what standard the bureau will apply to their case,” according to the CFPB. The CFPB will accept public comments on the rule for 30 days following Federal Reserve publication.