The Consumer Financial Protection Bureau’s reorganization of its enforcement and supervision unit could mean less oversight of small firms such as payday lenders and debt collectors

The CFPB’s enforcement office has since its 2011 inception had the power to initiate its own investigations and research matters into financial companies. But a reorganization announced inside the bureau Oct. 14 means that CFPB enforcement attorneys may lose that power and would have to rely on agency supervisors to send them cases.

CFPB supervisors don’t conduct examinations of smaller nonbank firms. And that means potential violations at debt collectors, payday lenders and other nonbanks may go undetected if the enforcement office is ultimately blocked from opening its own investigations, said James Kim, Co-Head of Ballard Spahr’s Fintech Team and a former CFPB enforcement attorney.

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