Notification Rules Survive as CFPB Hits Pause on Repeal

The Consumer Financial Protection Bureau (CFPB) has officially withdrawn its proposal to eliminate the longstanding requirement for state regulators to notify the Bureau before initiating enforcement actions. This reversal, announced on July 21, 2025, marks a significant shift in direction after the agency initially argued for repealing the rule in the name of efficiency. But industry pushback proved too strong, and for now, the 2012 notification procedures will remain in force.

Why the Notification Rule Matters

The original 2012 rule requires state attorneys general and regulators to notify the CFPB at least 10 days before filing any enforcement action under federal consumer financial protection laws. This is more than a courtesy email. The rule mandates a comprehensive notice that includes:

• The identities of the parties involved
  
  

• Detailed factual allegations
  
  

• A copy of the actual complaint
  
  

The intent? To prevent overlapping investigations, conflicting strategies, and duplicated legal efforts. In short, the rule was designed to create a clear channel of communication between state and federal regulators, something essential in an ecosystem with multiple oversight bodies.

CFPB’s Attempt to Repeal the Rule

In May 2025, the CFPB proposed to scrap the notification requirements, arguing that they were unnecessary. The Bureau claimed that the Consumer Financial Protection Act already mandates federal-state coordination, making these separate notification rules redundant. Eliminating them, the CFPB said, would reduce administrative overhead and ease compliance costs for both regulators and businesses.

On paper, it sounded like a smart move: less red tape, more streamlined operations. But the backlash was swift and loud.

Industry Response: Coordination Is Not Optional

Financial industry groups, legal associations, and compliance advocates quickly objected to the proposal. Their concerns centered on three key risks:

1. Loss of Coordination: Without advance notice, financial institutions could face simultaneous but uncoordinated enforcement actions from states and the federal government. This creates confusion, unnecessary legal complexity, and wasted resources.
   
   

2. Reduced Transparency: The current rule gives companies a brief but crucial window to assess risks and respond proactively. Without it, enforcement actions could feel more like ambushes than collaborative regulation.
   
   

3. Regulatory Chaos: Many companies operate across multiple states. Without a coordinated approach, inconsistent enforcement strategies could emerge potentially undermining legal consistency and consumer protection.
   
   

Industry groups argued that the notification rule wasn’t an extra step; it was a foundational safeguard that allowed for smarter, more effective enforcement across jurisdictions.

CFPB Pulls Back—For Now

Faced with “significant adverse comments” from stakeholders, the CFPB decided to abandon its repeal effort, at least for now. The agency emphasized that it will review the feedback and may return with a revised proposal in the future.

That means the 2012 rule remains active. State regulators must continue to provide the 10-day notice before initiating any enforcement actions under the Consumer Financial Protection Act. For compliance teams, that advance notice remains a critical tool for managing risk and preparing internal responses.

What Compliance Teams Should Do Now

While the CFPB has hit pause on its repeal plan, the conversation is far from over. Here’s how financial institutions should respond:

1. Maintain Existing Processes

Continue to track and respond to notifications from state regulators. The 10-day heads-up is still mandatory and should remain a key part of your enforcement risk workflow.

2. Monitor for New Rulemaking

This issue is likely to resurface. Stay alert for updated rulemaking efforts or revised proposals from the CFPB that may adjust, rather than eliminate, the notification requirement.

3. Coordinate Internally

Ensure your legal, compliance, and government affairs teams are aligned and able to respond quickly to enforcement activity. Treat the notification period as a critical window for strategy and risk assessment.

4. Plan for a Contingency Future

Build scenarios that account for both continued notification rules and a future where they are modified or eliminated. Don’t assume the status quo will last forever.

What This Means for the Future of Regulation

The CFPB’s withdrawal illustrates the tension regulators often face: balancing efficiency with transparency and coordination. While the agency aimed to streamline processes, industry groups successfully made the case that the notification rule wasn’t bureaucratic clutter, it was a critical coordination mechanism that supported fair and effective oversight.

Expect this debate to continue in future rulemaking cycles. The CFPB may still seek to modernize the notification process, but the fierce industry reaction proves that any changes to interagency enforcement protocols must be carefully considered.

For now, financial institutions can operate with the certainty that pre-filing notices remain required. But the conversation around regulatory streamlining is far from over and this won’t be the last time the industry will need to speak up to protect operational predictability.