New consumer agency targets debt collectors. Who can argue with that?

“Consumer financial products and services have become more complex over the years and they have expanded well beyond traditional banks,” he said. “Our proposed rule would mean that those debt collectors and credit reporting agencies that qualify as larger participants are subject to the same supervision process that we apply to the banks. This oversight would help restore confidence that the federal government is standing beside the American consumer.”

The Dodd-Frank law, which some Republican presidential candidates say should be repealed, called for the Consumer Financial Protection Bureau to be created, and for it to have authority to supervise nonbank firms in the specific markets: residential mortgage, payday lending, and private education lending. In other nonbank markets for retail finance the CFPB has the authority to supervise “larger participants,” if it defines those participants by July 21 of this year.

The plan to supervise debt collectors and credit-rating firms is timed to meet that deadline (after a 60-day comment period).

About 30 million Americans have debt under collection, the CFPB says, with an average amount under collection of $1,400.

Cordray said that debt collectors have more complaints lodged against them by consumers than any other industry according to a database maintained by the Federal Trade Commission.

The FTC has in the past pursued cases on behalf of consumers against debt collection firms. But that agency doesn't officially supervise the industry, examining records for potential violations of law the way the CFPB intends to do.

Now the CFPB and trade commission have agreed to coordinate oversight of markets where they both have jurisdiction.

Debt collectors do not use a single business model. Some try to get money from delinquent customers for a fee, while others buy customers' debt from lenders and then try to recover what is owed.

Some debt collectors have recently run into trouble with federal regulators.

Last month a division of Asset Acceptance Capital agreed to pay a $2.5 million civil penalty as part of a settlement with the FTC and Justice Department over charges that it used deceptive collection practices.

Material from Reuters was used in this story.

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